Table of Contents

What is Equity SIP and how does it work?

Equity SIP allows investors to automate the purchase of individual stocks at fixed intervals (daily, weekly, fortnightly, or monthly). You can choose either a quantity-based SIP (fixed number of shares) or an amount-based SIP (fixed investment amount). Orders are automatically executed at market prices on the scheduled date, provided you maintain sufficient funds in your trading account.

What are the key benefits of investing via Equity SIP?

  • Cost Averaging: Buy more when prices are low and fewer when high.
  • Disciplined Investing: Automate your equity investments without worrying about timing the market.
  • Convenience: "Set it and forget it" model helps simplify equity investing.
  • Wealth Creation: Long-term equity SIPs help you build a strong stock portfolio gradually.

Who should consider Equity SIPs?

Equity SIPs are ideal for:

  • Retail investors aiming to invest in stocks over time.
  • New investors looking for a stress-free entry into stock markets.
  • Demat account holders who want to automate stock accumulation.
  • Individuals wanting control over specific stock selection rather than mutual fund SIPs.

How is Equity SIP different from Mutual Fund SIPs?

Unlike mutual fund SIPs, Equity SIPs let you directly invest in listed individual stocks. This gives you:

  • Direct stock ownership.
  • Full control over stock selection, frequency, and investment amount.
  • Greater transparency and flexibility.

What is the difference between Amount-based and Quantity-based Equity SIP?

Amount-based SIP: In a Quantity-based SIP, you decide to purchase a fixed number of shares of a particular stock at regular intervals (daily, weekly, forth-nightly & monthly). The investment amount may vary depending on the market price of the stock on each investment date.

Example:

  • Suppose you set up a Quantity-based SIP to buy 5 shares of a company every month.
  • If the price of the stock in Month 1 is ₹200, you will invest ₹1,000 (5 shares x ₹200).
  • If the stock price increases to ₹250 in Month 2, you will invest ₹1,250 (5 shares x ₹250).
  • As the stock price fluctuates, the total amount you invest will vary, but the number of shares remains constant.

Amount-based SIP, invest a fixed rupee amount. Number of shares varies.

Quantity-based SIP: In an Amount-based SIP, you invest a fixed sum of money at regular intervals, and the number of shares purchased depends on the stock's price at that time. If the stock price is lower, you buy more shares; if it’s higher, you buy fewer shares.

Example:

  • Suppose you set up an Amount-based SIP to invest ₹1,000 every month in a particular stock.
  • If the price of the stock in Month 1 is ₹200, you will purchase 5 shares (₹1,000 ÷ ₹200).
  • If the price increases to ₹250 in Month 2, you will purchase 4 shares (₹1,000 ÷ ₹250).
  • In Month 3, if the price drops to ₹150, you will purchase 6.66 shares (₹1,000 ÷ ₹150). Since purchase of fractional shares is not possible in India, 0.66 shares will not be considered in this example. As such the quantity would be rounded down to 6 shares for purchase.

Quantity-based SIP, buy a fixed number of shares. Investment value varies with market price.

How do I start an Equity SIP?

To place an Equity SIP order:

  • Go to the “Place Order” section.
  • Select “SIP Order”.
  • Choose Quantity-based or Amount-based SIP.
  • Set frequency, number of installments, and start date.
  • Agree to Terms & Conditions and confirm the order.

Can I change or cancel my SIP plan?

Yes. You can modify the SIP quantity/amount, frequency, and number of installments anytime. To change the stock, cancel the current SIP and set up a new one.

What if I miss an Equity SIP payment?

If funds aren’t available in your ledger on the SIP date, the system will skip that installment. However, the SIP will continue as per your schedule.

Will I get notifications for my SIP?

Absolutely. You'll receive real-time alerts for:

  • Successful SIP executions
  • Upcoming SIP payment reminders

What is meant by frequency in an Equity SIP?

Frequency refers to how often you want to invest—daily, weekly, fortnightly, or monthly. SIP orders will be placed at these intervals starting from your chosen start date.

Is there a minimum investment amount for Equity SIP?

No fixed minimum. You can begin with even one share. Just ensure you have sufficient funds in your account on the SIP date, or the order will be cancelled.

Is there a lock-in period for Equity SIPs?

No. There is no lock-in period. You can sell your shares at any time post purchase.

Can I place sell orders under Equity SIP?

Currently, Equity SIP only supports Buy Orders.

What is the significance of cost averaging in Equity SIP?

Cost averaging is a key advantage of Equity SIP. By investing a fixed amount at regular intervals, investors buy more shares when prices are low and fewer shares when prices are high. Over time, this can lead to a lower average cost per share compared to making a single lump-sum investment. This strategy helps to reduce the risk of investing a large sum at a market peak and mitigates the impact of market volatility on the overall investment.

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