A logical question here can be that on one hand when we say that debt funds are less volatile, why do we need SIP in debt funds to tide over volatility?
Although a valid question, it disregards the fact that debt funds investment is prone to volatility as well; it is just relatively lesser than equity mutual funds. Also, it is relevant to note here that debt funds
investment is not risk-free. It suffers from interest rate risk, which refers to the fluctuation in interest rates which directly impacts the bond price in the market. Hence, RCA, as a principle, will be very well applicable here
too. You read more about the risks associated with debt funds
With lumpsum investments, there is a need to time the market, which regular investors may not have the expertise of doing.
In addition to all the above, SIP in debt funds can also help in harnessing the power of compounding. Since mutual fund investments work on the principle of compound interest, longer your money stays invested, a relatively
better return you can get. With SIP instalments, the power of compounding helps you in maximizing the benefits of compound interest because of the investment being spread out in nature.