Four popular misconceptions investors have about SIPs — and the truth behind each of them.
Tejas Shah
Proprietor of Silicon One and Silicon Systems, AMFI-registered Mutual Fund Distributor since 2004, based in Vadodara.
SIPs are gaining popularity, and rightly so — they optimise investment returns for most investors. But rising popularity also breeds misconceptions, often because investors pick up half-understood explanations from others rather than the fund's actual mechanics.
Myth: SIPs are a separate investment product
An SIP is not an asset class or a product in itself — it's simply a disciplined, systematic way of investing into a mutual fund scheme. Saying "I invest in SIPs" really means investing regularly into a chosen fund via the SIP route.
Myth: SIPs guarantee profits, or always beat lump-sum investing
SIPs reduce the risk of mistiming the market through rupee-cost averaging, but they don't eliminate market risk or guarantee returns — the underlying fund's performance still matters most. Whether a lump sum or an SIP works better depends on market conditions at the time and the investor's cash flow, not a fixed rule either way.
Understanding what an SIP actually is — and isn't — helps investors set the right expectations and stick with the discipline through market ups and downs.
#mutual funds
Share this article
Enjoyed this article?
Subscribe to receive more insights like this directly in your inbox.
