Systematic investment plans (SIPs) have turned into the go-to option for investment in mutual funds, especially the ones linked with equity. A lot of reports and trends show that investors see no problem with sticking to their committed maturity period of an equity fund despite unsatisfactory returns. SIPs decrease the risk that market timing creates for making investments. In addition to following a regular schedule of investments, they put your money into different levels of the market. This helps in creating an average cost of buying units in a mutual fund.

However, SIPs are not just about investing in equity. You can also use SIPs to invest in debt-based mutual funds. However, to know why it is a good choice you need to know how it works:

Understanding SIPs for debt funds

If you have a decent understanding of SIPs, then you know that an asset or investment in mutual funds needs to have volatility in its value for growth. Now both types of mutual funds have a different type of volatility associated with them. Equity funds show uncertainty in the value of the investment option that your mutual fund invests you in. On the other hand, debt funds deal with volatility in the market.


Debt funds are associated with Net Asset Value (NAV). In the case of debt based mutual funds, their NAVs often experience a steady rise, especially if the mutual funds have a shorter duration. For this reason, some investors consider debt funds to be a low-risk investment option.

If you have defensive style of investing, a SIP in debt funds is the option for you to choose. It adds aa system to the overall investment. Moreover, it is easier to predict the returns on debt-based funds. Hence, you can plan your investment much earlier than you make it. Hence, even though investors often advise against using SIPs for debt funds, you should go for it. However, there is a way you should do it to make sure you cover all avenues.

How you can invest in debt fund SIPs?

Here’s how you can invest in debt funds via SIP mode of investment:

Divide your money

It is a famous saying that you shouldn’t put all your eggs in one basket. The reason for that is if something happens the basket, all your eggs are compromised at once. The same applies to investment as well. If you want to invest in debt funds through SIP, it is better to start with a smaller amount. Since, SIP in debt funds is almost uncharted territory, it isn’t smart to invest all of your monthly saving into them. Hence, you need to divide your money into debt and equity funds. If you have equal amount of money invested in both, you are guaranteed to have returns from at least one of them.

Focus on less-risky funds

How you do in debt fund SIPs depends on the fund you choose to investin. The important point to remember is that SIPs are simply a method of investment. Your choice of investing in a particular fund or not should be based on whether it meets your return expectations. Hence, before deciding to go for an SIP approach, you should pick out funds that have a higher chance of perform exceptionally well. Doing so and then using SIP make sure that you will get great returns without the worry of invest a huge amount at once.

Whether you decide to invest in debt funds via SIP or not should be dependent on your financial goals, risk profile, and investment horizon. Happy investing!


Natraj Studied bachelor's degree in finance and business from Telangana University, Nizamabad. A Writer based In India, He has a degree in Charted Accounts and has very knowledgeable in credit repair and Banking Sectors. So, I decided to start a blog and share my knowledge to the visitors.

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