The Twin Effect of Applicability and Awareness on Perceived Benefits of Systematic Investment Plan (SIP’S) among Gen Z Students: An Exploratory Study

Abstract

This exploratory study investigates the twin effects of applicability and awareness on the perceived benefits of Systematic Investment Plans (SIPs) among Generation Z (Gen Z) students in India. Despite the growing digitization and democratization of financial tools, Gen Z a generation characterized by technological fluency often lacks the financial literacy to leverage investment opportunities like SIPs. This research addresses the dual deficiency of awareness (cognitive understanding of SIPs) and applicability (perceived relevance to personal financial situations) as key barriers to SIP adoption. Drawing on behavioural finance and diffusion of innovation theory, the study employs a quantitative methodology, utilizing a structured questionnaire with 35 Likert-scale items administered to 200 Gen Z students. Descriptive statistics reveal moderate-to-high agreement across variables, with strong internal consistency (Cronbach’s ? = .969). Correlation analyses demonstrate significant positive relationships among key constructs, particularly between knowledge of SIPs, awareness, behaviour, and perceived benefits (e.g., V06-V05: r = .754, p < .001). However, variability in responses for applicability (V04) suggests nuanced perceptions of SIP relevance. The findings underscore the critical role of financial literacy and contextual relevance in shaping investment behavior. The study highlights the need for targeted educational interventions, tailored marketing strategies, and policy measures to bridge the awareness-applicability gap. Implications extend to stakeholders including educators, financial institutions, and policymakers, offering actionable insights to enhance SIP adoption among Gen Z. By integrating financial literacy with real-world applicability, this research contributes to fostering informed and disciplined investment habits early in life, ultimately promoting long-term financial security for younger generations.

Introduction

The global financial landscape is rapidly evolving with digitization, decentralization, and democratization shifting financial responsibility to individuals, especially youth like Gen Z. Despite their tech-savviness, many lack adequate financial literacy and awareness, limiting their use of tools such as Systematic Investment Plans (SIPs), which promote disciplined, long-term investing through regular fixed investments in mutual funds.

SIPs offer benefits like rupee cost averaging and volatility mitigation but suffer from low adoption among students and young investors due to gaps in both awareness (knowledge of SIPs) and applicability (perceived personal relevance). This dual gap forms the core problem addressed by the research.

With India’s large young population, integrating financial education with real-world relevance is crucial to empower Gen Z, who face unique economic challenges like student debt and underemployment. The study aims to analyze how awareness and applicability influence perceived benefits of SIPs, guiding educators, financial institutions, and policymakers to create effective interventions.

A comprehensive literature review highlights that while SIPs are preferred by risk-averse investors and offer disciplined investing advantages, lump-sum investments may outperform SIPs in bullish markets. Behavioral factors, demographic influences, and financial literacy levels significantly affect investment decisions. The research emphasizes the interactive effect of knowledge and relevance (twin effect) in financial behavior, rather than treating financial literacy as a one-dimensional concept.

Findings are intended to benefit multiple stakeholders—Gen Z students, educational institutions, financial service providers, policymakers, and researchers—by improving financial literacy programs, product design, and policies tailored to youth’s needs. This research fills a critical gap by combining behavioral finance theories with practical insights to foster confident, informed investment decisions among young investors.

Conclusion

The study demonstrates the robustness and reliability of the 35-item measurement scale, with high internal consistency (? = .969) and strong inter-item correlations, supporting its validity for assessing the intended construct. Most variables (V01–V03, V05–V06) exhibited moderate-to-high agreement and strong relationships, indicating cohesive measurement of the underlying construct. However, V04 showed distinct characteristics—lower mean (3.57), higher variability (SD = 0.85), and weaker correlations—suggesting it may tap into a different aspect or require refinement for better scale alignment. The strong associations among other variables highlight their interconnectedness, making them central to the measurement model, while V04’s uniqueness warrants further investigation to clarify its role. For researchers, the scale’s reliability supports its use in future studies, though examining V04’s contribution could enhance construct validity. Practitioners can confidently apply the scale in assessments but should interpret V04 with caution, considering its potential distinctiveness. The findings emphasize the importance of analysing both reliability and inter-item relationships in scale validation, ensuring accurate measurement and application. Future research could explore refining V04 or developing abbreviated versions without compromising validity, ultimately strengthening the scale’s utility in both academic and practical settings.

References

[1] Uddin, A. (2016). Investor perception about Systematic Investment Plan (SIP) plan: An alternative investment strategy. International Journal of Research in Humanities & Social Sciences, 4(3), 22–28. [2] Malkiel, B. J. (1995). Returns from investing in equity mutual funds. Journal of Finance, 50(2), 549–572. [3] Singhal, S., & Goel, M. (2011). Performance of SIP vs. lump-sum investments. Empirical Finance Journal, 8(4), 45–60. [4] Sharma, S. (2015). ELSS mutual funds in India: Investor perception and satisfaction. International Journal of Finance and Accounting, (2), 131–139. [5] Joseph, G., Telma, M., & Romeo, A. (2015). A study of SIP & LIP of selected large-cap stocks. International Journal of Management Research & Review, 5(2), 117–136. [6] Juwairiya, P. P. (2014). Systematic investment plan—The way to invest in mutual funds. Sai Om Journal of Commerce & Management, 9(1), 1–8. [7] Dominic, R., Dominic, N., & Akhila, P. A. (2023). A study on investors’ perception about Systematic Investment Plan (SIP): An alternative investment option. The Online Journal of Distance Education and e-Learning, 11(2), 1848–1856. [8] Gajera, A. (2020). An empirical study on risk and return analysis of SIP vs. lump-sum investment. International Journal of Management, 11(12), 2848–2855. [9] Raju, R. (2022). Realised returns, risks, and shortfall probabilities of SIPs: Evidence from India. Risks and Shortfall Probabilities of Systematic Investment Plans. [10] Aurora, R. S. (2020). A study on investor perception about SIP in Mumbai. Gyan Management, 142), 28–43. [11] Gondaliya, V. (2022). Perception level of investors towards SIP. EPRA International Journal of Economics, Business, and Management Studies, 9(4), 10–14. [12] Sangwan, A. (2019). Investors’ preferences for mutual funds in India. Think India Journal, 22(3), 7598–7608. [13] Choudhari, S. R., & Boargaon, H. (2020). The comparative study on Systematic Investment Plan and One Time Investment Plan in mutual fund. *GBS-IMPACT Journal, 6(1), 25–40. [14] Dr. S. Oviya, & Chandrakala, V. (2017). A comparative analysis of one-time investment and systematic investment plan. International Journal of Management and Social Science Research Review, 1(3), 136–143. [15] Gupta, H. (2015). A study on performance of Sensex and evaluation of investing lump sum or monthly regular investment in equity on risk and return for investor. International Journal of Development Research, 5(6), 4323–4327. [16] Jaison David, G. P., & Jojo, A. (2019). A study on investment decisions based on SIP, value averaging, and lump-sum investment. International Journal of Research and Analytical Reviews, 6(1), 1–10. [17] Sharma, R. S., & Somani, R. (2017). Analysis of SIP and lump-sum investment for portfolio management. International Journal of Innovative Research and Advanced Studies, 4(6), 264–269. [18] Batra, D., & Batra, G. (2012). A DEA comparison of systematic and lump-sum investment in mutual funds. International Journal of Computing and Business Research, 3(2), 1–10. [19] Jagdeesh, N., & Titman, S. (1993). Returns to buying winners and selling losers: Implications for stock market efficiency. Journal of Finance, 48(1), 65–91. [20] Panyagometh, K. (2013). Performance comparison between dollar cost averaging and value averaging investment strategies. Journal of Applied Finance & Banking, 3(3), 15–27. [21] Singhal, S., & Goel, M. (2011). Evaluating one-time investment vs. SIP in HDFC mutual funds. International Journal of Research in Finance & Marketing, 1(3), 90–108. [22] Somani, R., & Sharma, S. (2017). Analysis of SIP and LSIP for portfolio management. International Journal of Innovative Research and Advanced Studies, 4(6), 264–269. [23] Rouwenhorst, K. G. (1998). International momentum strategies. Journal of Finance, 53(1), 267–284. [24] Jahanvi, M. Kathari Santosh, Dr. Sanjay V Hanji (2023). Portfolio construction and investment decision using Markowitz model. Turkish Journal of Physiotherapy and Rehabilitation, 32(3), ISSN 2651 – 4451.

Copyright

Copyright © 2025 Ms. Priyanka R, Mr. N Nagasubba Reddy. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.