Why SIPs Are Preferred in 2025: Key Lessons from the Surge in Systematic Investments

One of the major benefits of SIP investments is that it is highly affordable. For example, with Tata Mutual Fund™, you can start investing through SIPs from as low as ₹150 per month . This low entry point allows anyone (even first-time investors) to start building potential wealth early without needing a large lump sum.

For more clarity, let’s check out five major reasons why you also may prefer the SIP route in 2025:
 

1. Your SIP Investments may help you to Build Consistency in your investing habit

   The biggest strength of a SIP is discipline. You invest a fixed amount every month, irrespective of whether markets are rising or falling. This inculcates the saving habit and lets you set aside a fixed sum of money regularly.
    

2. You Can Invest As Per Your Income Patterns

   A step-up SIP lets you increase your monthly investment amount every year. If your income rises, you have the option of increasing your SIP amount too, as per your financial capacity. 

   This approach may potentially build a much larger corpus in the long run compared to keeping your SIP fixed. 
    

3. You Can aim to Benefit from The Power of Compounding

   When you invest in a SIP, the potential returns you earn are added back to your investment. Now, those returns start earning their own returns. This cycle continues as long as you stay invested. 

   The benefit? Gradually, over 10, 15, or 20 years, this snowball effect may potentially grow even modest SIP amounts into a large corpus. 
    

4. You Can Stay Calm During Volatile Markets

   Markets never move in a straight line! They rise, fall, and often test your patience. 

   By investing via the SIP route, you can stay calm through these fluctuations because:

   • You are not actively tracking the market and

   • You invest the same amount periodically

     So, when prices fall, you automatically buy more units, and when prices rise, you buy fewer. Another advantage of this? You may also enjoy “rupee cost averaging”, which lowers your overall cost of investment.
      

5. You Can Invest Digitally Using Your Smartphone

   In 2025, several modern investment apps have made it easy to start investing via SIPs. For example, nowadays, a ₹1000 per month SIP for 5 years (or even lower) can be set up, tracked, and managed entirely online. By using such modern apps, you can:

   • Automate payments

   • Set annual step-ups
      

Additionally, some of these apps come with built-in SIP calculators, which let you estimate how much your money may grow. 

If you’re planning to start investing through the SIP route, Tata Mutual Fund™ offers a wide range of funds across categories such as:

• Equity

• Debt

• Hybrid

• ETFs

• Index Funds, and more.

Each scheme gives you the flexibility to invest through SIP or lump sum and is available in different plan & options like Direct, and Regular Plans. Within each of these plans there are different options like Growth, IDCW (Income Distribution cum Capital Withdrawal) Payout or IDCW Re-investment. For your reference, below is a list of mutual funds you may consider investing for your portfolio:

(An open-ended equity scheme investing in the Banking and Financial Services sector)

Tata Banking and Financial Services Fund invest at least 80% of its assets in equity & equity related instruments of companies from India’s banking and financial services sector. The goal of this SIP is to aim to grow your money over the long term as the financial sector expands. However, the returns are not guaranteed. 

Also, the fund’s performance is compared against the Nifty Financial Services Index, which tracks the performance of the Indian financial market which includes banks, financial institutions, housing finance, insurance companies and other financial services companies.
 

[An open-ended debt scheme investing predominantly in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/derivatives), a relatively high interest rate risk and moderate credit risk]

The objective of SIP in this scheme is to aim to generate income through investment primarily in:

• Floating rate debt instruments

• Fixed-rate debt instruments (swapped for floating-rate returns) 

• Money market instruments. 

Tata Floating Rate Fund - The fund's performance is compared against the CRISIL Short Duration Debt A-II Index, which tracks short-term debt investments.

(An open-ended Target Maturity Index Fund investing in constituents of Nifty G-Sec Dec 2029 Index. A Scheme with Relatively High Interest Rate Risk and Relatively Low Credit Risk)

Tata Nifty G-Sec Dec 2029 Index Fund invest in Securities# covered by Nifty G-Sec Dec 2029 Index. The fund aims to match the returns of the Nifty G-Sec Dec 2029 Index, subject to tracking error. However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. For those unaware, this index tracks a mix of government securities chosen based on:

• Liquidity and
• The total amount issued

However, returns are not guaranteed and may differ from the index.
 

(An open-ended scheme investing in arbitrage opportunities)

Tata Arbitrage Fund seeks to generate reasonable returns by investing predominantly in arbitrage opportunities in the cash and derivatives segments of the equity markets and by investing balance in debt and money market instruments. However, there is no assurance that the objective of the Scheme will be realised and the Scheme does not assure or guarantee any returns.  This scheme seeks to generate arbitrage opportunities by:

• Buying stocks in the cash market and
• Selling them in the futures market (when a price gap exists)

In this way, the scheme tries to earn a “differential profit”. This strategy aims to reduce overall risk as the price gets fixed at the time of entering into arbitrage. However, there is no guarantee that the objectives of this scheme will be achieved.

(An Open-Ended Exchange Traded Fund replicating/ tracking -Nifty Private Bank Index)

Tata Nifty Private Bank Exchange Traded Fund (ETF) invests in Equity and Equity related instruments covered by Nifty Private Bank index. The index comprises of 10 private sector banks. 

The index follows a “free-float” method and only focuses on the market value of publicly available shares. While this mutual fund scheme aims to match the index’s returns, differences may occur due to tracking error. Also, the scheme does not guarantee any returns.

So, till now, you must have understood why SIPs are the preferred in 2025. Nowadays, several investors make SIP investments, as they are affordable and remove the need for timing the market. Additionally, potential benefits of SIPs include:

• Benefit from rupee-cost averaging + compounding

• Build a consistent saving habit and discipline

• Stay invested through all the market cycles

• Access the market with low monthly investment amounts

If you are looking to invest through this route, you may also consider the various  options offered by Tata Mutual Fund™, which include equity, debt, hybrid, ETFs, and index-based schemes. You may pick the appropriate scheme as per your goal & risk appetite and try to achieve your financial objectives for the years ahead.

The views mentioned above are for information & educational purposes only and do not construe to be any investment, legal, or taxation advice. Investors must do their own research before investing. The views expressed in this article are personal in nature and in is no way trying to predict the markets or to time them. Any action taken by you on the basis of the information contained herein is your responsibility alone, and Tata Asset Management Pvt. Ltd. will not be liable in any manner for the consequences of such action taken by you. Please consult your Mutual Fund Distributor before investing. The views expressed in this article may not reflect in the scheme portfolios of Tata Mutual Fund. There are no guaranteed or assured returns under any of the schemes of Tata Mutual Fund.