What is the guarantee of returns in SIP?

SIP is an investment in Mutual Funds and Mutual fund invest in the market and so it is subject to market risk. Mutual funds diversify the funds in a such a way that the risk is minimized. However, any major factor in the market will affect the returns. If an investor chooses funds with good performance history also considering one’s age and risk-taking ability then the SIP not only minimize risk but also give return higher than the inflation rate, only in long-run.

SIP is only a mechanism of investing small amounts in a systematic manner across time into Mutual Funds. The Asset Management Companies further invest the money from the Mutual Funds in other instruments like Stocks. In a way, you are indirectly investing in stocks.

Since there is never an assured return in Stocks, the same also applies to an SIP liked Mutual Fund. The value of the return is completely depending upon how the fund is placed in its investments and the Net Asset Value (NAV) as of the day you redeem your units.