Investors Turn to SIPs for Safer Wealth Growth
In India, a significant shift is occurring in the investment landscape as investors move away from lump-sum investments and embrace Systematic Investment Plans (SIPs). This change is particularly relevant in the context of ongoing market volatility due to geopolitical tensions and trade issues. Retail investors are becoming more aware of market fluctuations, opting for structured investment approaches that allow them to build wealth steadily over time.
SIPs have gained immense popularity, accounting for about 35% of net inflows into equity-focused mutual funds in 2025. This marks a significant increase from around 25.36% in 2024, reflecting a structural shift in investor preferences rather than a fleeting trend. The steady growth of SIPs highlights the growing inclination towards disciplined investing in equities, which is especially crucial in uncertain times.
Moreover, monthly SIP inflows have shown remarkable momentum. For instance, in December 2025, SIP investments reached Rs 31,002 crore, reflecting a growth of over 17% compared to the previous year. This consistent saving approach helps investors avoid the pitfalls of market timing, allowing them to benefit from rupee cost averaging and the power of compounding over longer durations. As a result, more first-time investors are entering the mutual fund arena, increasing retail participation in capital markets.
On the other hand, lump-sum investments have become less favored, primarily due to heightened market volatility. Investors are wary of making large investments at once, fearing short-term market swings that could adversely affect returns. A notable decline of around 27% in lump-sum investments was observed in 2025, showcasing a marked shift in investor behavior.
For many individuals in India, the financial capacity to make a lump-sum investment is limited. Consequently, a long-term investment approach, such as SIPs, becomes more attractive. As A. Balasubramanium, CEO of Aditya Birla Sun Life Mutual Fund, noted, “To make something (money), you need to be at least in the game.” This mindset encourages consistent investing, helping individuals avoid missing out on potential opportunities.
Despite the uncertainty in the short term, long-term sentiment towards Indian equities remains positive, supported by favorable macroeconomic conditions. Factors like low inflation and strong GDP growth contribute to this outlook. However, sluggish wage growth poses challenges, making SIPs a more convenient option for many investors who may find it difficult to invest large sums at once.
Overall, the rise of SIPs is not just a trend but a crucial driver for the mutual fund industry’s growth in India, with average assets under management crossing Rs 81 lakh crore. This growth is propelled by consistent retail participation, with SIPs providing a stable and predictable flow of investments, even in times of market uncertainty.
