Myths About SIPs – Part 1

Introduction

SIPs have made investing in mutual funds easy and consistent. But despite their popularity, many investors still hold myths that prevent them from getting the best out of their SIP journey. 

From returns guarantees to locking periods — the misinformation around SIPs can lead to wrong expectations and poor decisions. Let’s bust some of these myths with real-life clarity.

Top 5 SIP Myths – Busted! 

  🧠 Myth #1: SIP Guarantees Returns 

  Truth: SIP is just a method of investing — not a product. Returns depend on the performance of the underlying fund, not the SIP itself.

🕒 Myth #2: SIPs Are Only for the Long Term 

  Truth: While long-term investing smoothens market volatility, SIPs can be started for short-term goals too — like 3–5 years — if the fund type matches the goal (e.g., debt funds for short-term needs).

  🚪 Myth #3: SIPs Come with Lock-in Periods

Truth: Most SIPs are in open-ended funds, which are fully liquid. You can redeem any time (except ELSS which has a 3-year lock-in). 

  📈 Myth #4: SIPs Work Only in Falling Markets

Truth: SIPs average out costs over time — they benefit from volatility, not just falling markets. Over long periods, even flat or rising markets can deliver great SIP returns.

  💼 Myth #5: You Must Start SIP with a Big Amount

Truth: You can start SIPs with as little as ₹100 to ₹500. What matters is consistency, not the starting size. 

Real-Life Example: Nisha's SIP Confusion Nisha, a 27-year-old teacher, thought SIPs guaranteed 12% returns and were locked in for 5 years. She was shocked when her equity SIP showed negative returns after a 1-year market dip and almost stopped it. 

 Her advisor explained that SIPs need time and patience, especially in equity funds. She held on and by year 4, her average SIP return grew to 11.2% CAGR — all because she stayed the course and understood the real rules of the game.

Conclusion 

 SIPs are a powerful tool, but only when used with the right knowledge. Don’t let myths cloud your investing decisions. Get the facts, stay invested, and let time and consistency do the magic.

Talk to your advisor, check your SIP assumptions, and correct any myths before they cost you returns or confidence. 

Summary Table: SIP Myths vs Facts