A few weeks ago, a conversation with an investor left me both amused and slightly alarmed. He had a couple of crores from a property sale sitting idle in a savings account. When I suggested gradually investing it in equity mutual funds through an SIP, he looked almost offended.
“But I have ready money,” he said, as if I had somehow missed this crucial fact. “I don’t need to do SIP.”
It took a moment to sink in. In his mind, SIPs were for people who couldn’t invest in one shot. Suggesting an SIP to someone with crores was like offering an Alto to a customer who had walked into a Mercedes showroom. It wasn’t a logical objection—it was about status. SIPs, to him, were for the poor.
This is an unintended side effect of how SIPs have been marketed in India over the past decade. The mutual fund industry rightly focused on democratising investing.
The pitch was simple: you can start with as little as ₹500 a month. No need to wait until you have a substantial sum. Begin where you are, with what you have. It worked.
Millions of Indians who had never considered equity investing now run monthly SIPs, and the cumulative flows have become enormous.
But somewhere along the way, this successful marketing created an unintended perception. If SIPs are for people who can only invest ₹500 or ₹5,000 a month, then surely those with larger sums should be doing something more sophisticated? This is a complete misunderstanding of what an SIP actually does and why it exists.
Fundamental misunderstanding
The logic of systematic investing has absolutely nothing to do with the size of your corpus. Whether you have a thousand rupees or several crores, the fundamental problem remains the same: nobody knows what the market will do tomorrow, next month, or next year.
When you have a large sum to invest, you face a genuine dilemma. If you put it all in today and the market falls by 20% next month, you’ll feel terrible. If you wait for a better entry point, you might wait forever while the market climbs away from you.
I have written before about why SIP investors remain remarkably calm during market downturns, while traders and analysts wonder why they don’t panic and sell. The explanation lies in psychology. Your average cost smoothens out over time, and short-term volatility matters far less. This is a psychological benefit when you have invested a large sum.
The disdain for SIPs among wealthy investors also reveals another assumption— having money confers a special ability to time markets. It doesn’t. However, the uncertainty that makes SIPs sensible for the small investor makes them equally sensible for the large investor.
There is another factor at play here, one I encounter often. Whenever investors display self-defeating behaviour, an unscrupulous salesperson is often lurking in the background. This case is no different.
Wealth managers at banks and large distributors have strong incentives to push wealthy clients towards immediate lump sum investments. Their commission arrives the moment the money goes in. Why would they encourage a 12-month SIP when they can book the entire fee today?
Worse, a prolonged SIP is risky for them. Another relationship manager might redirect the remaining instalments to another account. For the salesperson, speed is everything. For the investor, patience is everything. These interests are directly opposed.
Of course, execution differs at scale. Someone with a couple of crores won’t run a 10-year SIP of ₹10,000 a month. But investing systematically over 12 to 18 months through a structured plan is entirely sensible. The principle is identical — the amounts and timeframe simply scale differently.
The best investment strategies are boringly universal. They work whether you’re investing your first savings or deploying a windfall. The investor who believes SIPs are beneath them has confused a marketing message with an investment principle. The market doesn’t care whether you arrived in a Mercedes or an Alto. It will treat your money with the same indifference either way.
Dhirendra Kumar is the founder and chief executive officer of Value Research, an independent investment advisory firm.
