Systematic investment plans (SIPs) offered by mutual funds have captured the imagination of individual investors in India of late, as testified by the inflows through this route.

As per data disclosed by the Association of Mutual Funds in India (AMFI), the net monthly inflow through SIPs has risen progressively from Rs 3,122 crore in April 2016 to Rs 7,917 crore in June 2020. With this, the overall inflow during the period stands at Rs 3.28 lakh crore.

While the flow of money through the avenue has slipped from record high of Rs 8,641 crore in March 2020, and the SIP closure ratio (SIPs discontinued to new SIPs registered) has risen to 72% in June 2020 from an average 58% in fiscal 2020, but, the avenue continues to remain an active investment strategy.

SIP investments necessitate two things: investments should be long term (merits showcased in the Crisil-Moneycontrol study dated March 2020) and schemes should be selected wisely. This article explores the latter.