From Dreamers to doers: SIPs are reshaping investing in India

livemint.com:

A year after the Securities and Exchange Board of India (Sebi) was established, private sector entities began entering the mutual fund industry. Five years later, in 1993, Kothari Pioneer, now Franklin Templeton, launched the first systematic investment plan (SIP). Today, SIPs are about to become one of the most preferred investment avenues for Indian investors.

According to data from the Association of Mutual Funds in India (Amfi), the monthly SIP book grew about 2% between 16 April and 24 May. The SIP monthly book rose from ₹20,371 crore in April 2024 to ₹20,904 crore in May, marking an all-time high for monthly SIP inflows.

While it took over three decades for the SIP monthly book to reach ₹20,000 crore, the next ₹30,000 crore could be added in just 4-5 years. Assuming a month-on-month growth rate of around 2%, the milestone of ₹50,000 crore could be achieved by January 2028, and ₹1 trillion by December 2030.

In the past decade, India has witnessed significant rise in financial savings, with retail investors emerging as one of the strongest pillars of India’s growth trajectory. Besides broadening the investor base, they are also providing a strong foundation for the market. According to the Ministry of Statistics and Program Implementation (MoSPI) estimates, the household savings pool has declined drastically, with a corresponding increase in loans and investments, especially in mutual funds. This influx of savings into investments is catalyzed by easy, regular and low-ticket investment avenues such as SIPs. 

SIP is an investment tool allowing people to invest a nominal amount—this is the USP of SIPs. It allows small investors with relatively low risk appetite to also enter the securities market. The average SIP