What is a Stock SIP - Is Stock SIP a Good Idea What is a Stock SIP - Is Stock SIP a Good Idea

What is a Stock SIP: Is Stock SIP a Good Idea?

Systematic Investment Plans (SIPs) have become a popular investment method over the years. SIPs allow you to buy at regular intervals and cultivate a habit of making your money work for you. Interesting, right? Let’s talk more about how you can start SIP in the share market!

What is a Stock SIP?

A Stock SIP means a method of investing in the stock market where you allocate a fixed amount of money to buy shares across a fixed period of time. Stock SIPs allow you to create wealth for the long run, slowly and steadily for goals that are set for 5+ years down the line. 

The cool part about stock SIPs is that you have a higher degree of control, right from the frequency of investment to the type of stock you buy. While most SIPs occur at a set date every month, you could start a daily or weekly stock SIP based on which platform you’re using. 

Of course, the kind of equity shares you invest in will depend on your financial goals and risk appetite. Either way, you can choose whatever SIP amount is comfortable for you, starting with as low as ₹1000. 

This SIP amount can be increased as you start earning more or accrue more sources of income. The former is self-explanatory.

The latter requires you to become a smart investor, say by using capital gains from fixed-income securities as the base or addition to your stock SIPs. 

Stock SIP vs Mutual Fund

SIP is an investment method that can be used in any asset, although it’s often associated with mutual funds. Many investors are confused between stock SIPs and mutual fund SIPs. Let us solve your doubts and explain exactly what stock SIP means. 

When you start a stock SIP, you invest little by little in individual shares like Reliance, TCS, Infosys, and others. On the other hand, starting a mutual fund SIP allows you to invest little by little in a basket of tens of shares, bonds, and more. 

Furthermore, a mutual fund is managed by a team of experts. They’ll handle the analysis, buying, and selling for you which means all you have to do is ensure that you’re a disciplined investor. You’ll be your own boss when it comes to stock SIPs. 

Truth is, both these types of SIPs are known to provide a decent avenue for creating wealth. The difference is that you’ll have to make a conscious decision of choosing to let others manage your money for you or manage it yourself. 

What is stock SIP 🗸 Stock SIP vs mutual fund SIP 🗸 let’s move on to why stock SIPs can be a potential investment avenue.  

How to Calculate SIP for Stocks?

Calculating SIPs can help you understand how many years and how much returns it will take to achieve your financial goals. To accurately calculate that, you must decide your monthly investment amount, time period, and expected return rate. 

This might be a complex calculation, especially for new investors. Fortunately, you can calculate how much money you need and how much return you can gain using online SIP return calculators. 

You can adjust your monthly investment, time period, and returns so you can start a plan that works for you. Go back to the example of ₹1000 per month stock SIP. You must be thinking that ₹1000 per month isn’t much. 

You’re right – but ₹1000 per month for many years can compound into a healthy sum. Want to visualize this? Try the SIP calculator! It’s useful and can help you decide which one is the best stock for SIP.

Why Choose Stock SIPs?

Here are five reasons why you can choose Stock SIPs for your next investment.

1. Reduced Risk

Stock SIPs enable risk reduction through ‘rupee cost averaging’. Markets typically move in cycles. Some cycles are good when the market goes up. Others are not as good when the market goes down. 

Investing consistently across these market scenarios over multiple years can help you make the most of the cyclical nature of the market. 

Due to the flexibility of stock SIPs, you get to buy more shares when the price is low and fewer shares when the price is high. That’s how SIPs average out the extremes of purchase prices. 

Furthermore, you have complete control over your investment, meaning you can pick companies that are less risky or create a combination of shares with potentially less risk.

2. Cost-Efficient

The initial cost you need to start a stock SIP is low, as it is limited to the price of the share. Thus, if you are a new investor with limited capital looking to invest systematically, you can choose stock SIPs. You can also step up your SIP in line with your income.

3. Affordable

Stock SIPs provide investors with the opportunity to accumulate a decent amount of shares over the long term. For example, even if you start with just 2 shares of Company X worth ₹450 a month, you will end up with 24 shares of the company at the end of the year. It is less of a burden on your pocket as you don’t have to make lumpsum investment decisions.

4. Less Paperwork

You need to open a demat account to start a stock SIP. The process is simple and happens entirely online which means little to no paperwork. In fact, brokers like Dhan do not charge any account opening or AMC/platform fees.

5. Disciplined Approach 

When you invest on a daily, weekly, or monthly basis, you are cultivating a discipline of saving and investing. The amount for stock SIP is deducted directly from your bank account on a prespecified date, thus organizing your investment.

Steps to Start Stock SIP

Now that we have established that stock SIPs are an excellent choice for investors who like to make their own investment decisions, it is time to learn how to start SIP in the share market.

1. Choose an Investment Platform

You can start a stock SIP through a SEBI-approved platform like Dhan. Most investors like to evaluate the charges, reviews, and features that a platform offers before opening an account. P.S.: Dhan is rated 4.5 on the Play Store. Check out the app: Download Dhan Now

2. Open a Demat Account

Once you’ve selected a platform, it’s time to open a demat account. The process is fairly simple – all you have to do is submit proofs (identity, address, income, etc) and then wait for the platform and exchanges to approve your KYC. 

3. Start Stock SIPs

Do your market research, analyze fundamentals, and pick the best stock for SIP. Bear in mind that there’s no general formula to make this work. You’ll have to analyze a company’s balance sheet, stock performance, and much more. 


Stock SIPs can be a useful tool for achieving your long-term financial goals. It allows more flexibility and distributed risk for investors who want to build wealth regularly.

Moreover, Stock SIPs are more cost-effective when compared to mutual funds SIPs. You can start SIP in the share market with Dhan and enjoy awesome features like daily, weekly, and monthly SIPs!

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