📚 Financial Education Library › Article #12
Published: 2026-06-21 · By Bhanuprakash Sardesai
12. Rupee Cost Averaging: The Secret to SIP Success
Rupee-cost averaging is the reason SIPs feel calm in choppy markets. Every month your fixed contribution scoops up more units when prices are down and fewer when they're up. You never have to call a top or a bottom — the discipline of regular investing handles the averaging for you, dragging your per-unit cost down over time.
Let's illustrate with a simple example. Suppose you invest ₹10,000 monthly in a mutual fund whose NAV fluctuates: Month 1: NAV ₹100 (buy 100 units), Month 2: NAV ₹80 (buy 125 units), Month 3: NAV ₹120 (buy 83.33 units), Month 4: NAV ₹100 (buy 100 units). Total investment: ₹40,000. Total units: 408.33. Average cost per unit: ₹40,000/408.33 = ₹97.96. Average NAV over the period: (100+80+120+100)/4 = ₹100. You bought at an average price lower than the average NAV – that's RCA at work!
RCA works best in volatile, long-term upward-trending markets – which perfectly describes equity markets. During market crashes, your fixed SIP amount buys significantly more units. When the market recovers, those extra units turbocharge your returns. You can instantly estimate your future returns using our free online SIP Calculator to see how consistent monthly investing builds wealth over time.
RCA has psychological benefits too. Knowing that market dips actually benefit your long-term SIP returns can help you stay calm during volatility. Use our SIP Calculator to model different market scenarios and see the power of RCA.
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