Bangalore/Mumbai, 27 August 2024: Zerodha Fund House in its recent study cited an exponential
surge in the adoption of Systematic Investment Plans (SIPs) among retail investors and gaining ground
as a mode of investment in mutual funds. This is evidenced by the rising SIP accounts and also the SIP
Contributions over the past few years. As of June 2024, total SIP AUM stood at around 20% of the
overall Mutual Fund industry AUM.
Rising SIP Contributions and Outstanding SIP Accounts:
The number of SIP accounts saw a significant 59% increase, growing from 5.28 crore to 8.4 crore
between March 2022 and March 2024. This trend continued with rise in SIP accounts in FY25
accounting to total number of outstanding SIP accounts of more than 9 crore as of July 2024
SIP contributions have also experienced significant growth, with about 56% increase from about
₹12,000 crore to about ₹19,000 crore between March 2022 and March 2024. In the first few months
of FY25, SIP contributions have increased to more than ₹23,000 crore, representing an increase of
around 89% from March 2022. While the SIP Contributions and the total SIP Accounts are increasing,
the average SIP amount has shown stability with minor fluctuations over the past few years,
maintaining a steady trajectory at around 2,200-2,500 INR.
Interesting to see that the average SIP Amount has stayed relatively uniform
Vishal Jain, CEO of Zerodha Fund House said, “To fully maximize the benefits of Systematic Investment
Plans (SIPs) over the long term, investors should stay disciplined with their investments irrespective of
market conditions and also consider progressively increasing their contribution amounts in tandem
with their growing incomes. This strategic approach to stepping up SIPs ensures that your investments
keep pace with inflation and changing financial goals.”
Why does it make sense for investors to Step Up their SIPs?
Step-Up SIPs, a strategic variation of regular SIPs, offers a compelling way to increase investment
contributions as income levels rise. Data shows that a regular monthly SIP of ₹1000 in Nifty
LargeMidcap 250 TRI, since inception of index till March 2024, will reach an investment value more
than ₹12 lakhs.
With a 5% annual step-up it can grow to about ₹17 lakhs by March 31, 2024. The value increases to
₹35 lakhs with an annual step-up of 15%, and to an impressive number close to ₹84 lakhs with an
annual step-up of 25%.
Step-Up SIPs provide investors with the flexibility to adjust their investment amounts in line with
income growth. The idea is simple: As your income rises, a gradual increase in the SIP contribution
may potentially lead to an accumulation of higher corpus in the long term. Most salaried individuals
expect a yearly salary hike and may get bonuses on an annual basis. Hence, one may opt for an
investment approach which steps up your SIP amount in line with the rising income levels.
