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What is rupee cost averaging?
Rupee cost averaging is what happens when you invest a fixed amount regularly: you buy more units when prices are low and fewer when they are high, so your average cost per unit ends up below the average price.
How it works
It does not guarantee a profit, but it removes the need to time the market, and it makes falls useful: the cheapest units are bought when the news is worst.
Example
₹1,000 invested at NAVs of ₹10, ₹8 and ₹12.50 buys 100, 125 and 80 units: 305 units for ₹3,000. Your average cost is ₹9.84 a unit, while the average NAV was ₹10.17.
Keep in mind
- It works only if you keep investing through the falls.
- It reduces timing risk, not market risk.
Questions people ask
Does rupee cost averaging guarantee returns?
No. If prices fall and stay low, the investment will still show a loss.
Is it the same as a SIP?
A SIP is the tool; rupee cost averaging is the effect it produces.
Related terms
General information for education, not investment advice or a recommendation of any scheme. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance may or may not be sustained in future. Last reviewed 25 October 2026.