Every month, you may earn cashback on UPI payments, Amazon orders, credit card spends, and grocery app purchases. But where does that money go? Most people use it for their next purchase, another food order, or a minor expense. Over time, these small amounts add up, yet they make almost no difference to your financial future.
However, the difference lies in how you use that cashback. Most people consider it extra money to spend, but you can also turn it towards long-term wealth creation. In turn, it can become a regular investment habit.
Most people think that investing cashback in an SIP is difficult, but it’s not. Rather, you just need to set aside the cashback that you get and invest it regularly. Now, in this guide, we will tell you how to turn that small amount into a Systematic Investment Plan (SIP), and what your investments can grow into in the next five or ten years.
How Much Cashback are You actually Earning?
People often overlook how much cashback they earn each month because it is a small amount across different platforms. But a quick audit of your UPI payments, online shopping, credit card spends, and grocery apps will tell you how much you can potentially set aside for investment.
| Source | Monthly earnings | Where does it land? |
| Amazon Pay UPI (1.5% on purchases) | Rs. 75 to Rs. 150 | Amazon Pay Wallet |
| Flipkart Axis Bank card (5% on Flipkart) | Rs. 100 to Rs. 300 | Statement credit |
| Swiggy/Zomato UPI cashback | Rs. 50 to Rs. 100 | Payment wallet |
| Bank credit card rewards | Rs. 200 to Rs. 500 | Points/ statement |
| Grocery app cashback | Rs. 50 to Rs. 150 | App wallet |
| Total monthly | Rs. 475 to Rs. 1,200 | Scattered across wallets |
Cashback often comes in small amounts on different online wallets and shopping apps. So, it is easy to ignore it. Rather than saving it, people spend it on their next purchase on the same platform.
For example, I tracked my cashback for three months and found Rs. 780 per month going into Amazon Pay.
Why does cashback feel like spending money and not earning it?
Behavioral economics often gives one explanation: mental accounting. According to this, people mentally divide money into different categories IN their mind. So, the cashback they get often feels like an extra bonus to shop.
For example, when you spend Rs. 1,000 and get Rs. 50 in cashback, you may feel that you got it for Rs. 950. In this way, the cashback feels like money you can freely spend rather than save.
In turn, the solution is to create a simple system that puts your cashback into savings or investments before it is used for everyday spending. You don’t essentially have to need more willpower; you just need to be more consistent.
What is SIP and why do small amounts work better than you think?
A Systematic Investment Plan (SIP) enables you to invest a fixed amount regularly in a mutual fund. Some schemes and platforms will also allow you to invest with an initial amount of Rs. 100. However, the minimum amounts vary in different schemes.
Now, the key is consistency rather than waiting to start with a large amount. Even small cashback contributions can build an investing habit over time.
Now, the compounding math that makes this worth doing:
| Monthly SIP amount | Annual return (12%) | Value after 5 years | Value after 10 years |
| Rs. 500 | 12% | Rs. 40,929 | Rs. 1,16,170 |
| Rs. 750 | 12% | Rs. 61,393 | Rs. 1,74,255 |
| Rs. 1,000 | 12% | Rs. 81,875 | Rs. 2,37,339 |
| Rs. 1,900 | 12% | Rs. 98,228 | Rs. 2,78,807 |
You can invest Rs. 500 every month for 10 years at an assumed 12% annual return. Eventually, it can grow your contributions to Rs. 1.16 lakh. It is the same money that would have otherwise disappeared into everyday purchases.
Think about the same idea with Rs. 600 in monthly cashback. You can see how that small amount can grow to around Rs. 1.39 lakh over 10 years and change how you view cashback. Don’t treat it as spare money to spend, but as an opportunity to invest money. These figures are illustrative, not assured, because the mutual fund returns depend on market performance.
How to Redirect Cashback Into a SIP in 4 Steps?
1. Consolidate your cashback
Your cashback will usually be diversified across multiple wallets and apps. This makes it difficult to track and save it. So, start by listing where you earn cashback and, wherever possible, use a primary payment method that makes it easy to keep track of it.
2. Calculate your average monthly cashback
Take a look at your cashback earnings on different platforms. You can keep track for the last three months. Then add the amounts and divide the total by three to find your average monthly cashback. Use this figure to decide how much you are comfortable investing every month.
3. Choose a SIP platform and Mutual Fund
Some platforms for SIP include Angel One, Zerodha Coin, Groww, and Paytm Money. All of them offer different ways to invest in mutual funds. You can compare their charges and features before zeroing one down. Also, consider their costs, risks, and investment rather than choosing a fund on past returns alone.
4. Automate Your Monthly Investment
Set up an automatic monthly SIP debit from your bank account. Set a date that works with your cash flow. You can track your cashback separately and use it to refill the amount you invest. However, since the cashback can come on different dates every month, try to keep adequate funds in the bank for the scheduled debit.
How to earn more Cashback to invest more?
Your monthly SIP amount depends on how much cashback you earn. Now, you can increase it by strategically combining your available savings.
Here is a simple way to stack your savings:
#1. Look for a verified coupon code on dealsshutter.
#2. Decide on a cashback payment method.
#3. Apply for an eligible instant discount using any available bank card offers.
Before you decide to confirm the purchase, check DealsShutter for available coupon codes for platforms
Remember to verify each offer’s terms, as coupon codes, cashback, and bank discounts cannot always be combined.
For example, take a look at the full system:
- Rs. 3,000 Amazon order
- DealsShutter coupon (10%): Rs. 300. So, the total will be Rs. 2,700
- Amazon Pay ICICI 5% cashback will be Rs. 135
- Total savings: Rs. 570 on a Rs. 3,000 order.
- Rs. 135 cashback goes to the SIP this month
- Rs. 300 coupon savings + Rs. 135 additional from the bank offer = Rs. 435 available to transfer to a SIP manually, if you choose.
Where to start your SIP? (The Platform Comparison)
| Platform | Min SIP | Comparison | Best for |
| Groww | Rs. 100 | Zero | Beginners, simple interface |
| Zerodha Coin | Rs. 100 | Zero | Existing Zerodha users |
| Paytm Money | Rs. 100 | Zero | Paytm cashback users (direct transfer) |
| ET Money | Rs. 500 | Zero | Insurance + SIP in one app |
| Kuvera | Rs. 100 | Zero | Goal-based investing |
Platforms such as Groww, Zerodha Coin, and Paytm Money offer direct plans. They exclude distributor commissions and generally have a lower expense ratio than regular plans. If your cashback is eligible for transfer from your Paytm wallet to your bank account, you can use the transferred amount to fund your SIP.
Also, check if your cashback balance can be transferred to your bank account. This is because not all Amazon Pay balances are eligible for withdrawal. So, once the money reaches your bank account, your scheduled SIP debit can take care of it.
What fund should you choose for your first cashback SIP?
If you are investing Rs. 500 to Rs. 1,200 a month from cashback, begin by understanding your risk tolerance and how much you can invest. Don’t look for the highest returns. A Nifty 50 Index Fund is one option to research. It represents 50 major Indian companies. In fact, it still follows an index, and it does not rely on a fund manager to actively select stocks. However, its value can still fall when the market declines.
Some funds to compare include:
- Nippon India Nifty 50 Index Fund
- UTI Nifty 50 Index Fund
- HDFC Nifty 50 Index Fund
However, beginners must avoid sectoral, thematic, and small-cap funds. They can be more volatile and concentrated. So, they are not suitable for someone who is new to investing and uncomfortable with major fluctuations.
Don’t forget that a SIP is a method of investing and not a guarantee against losses.
What could your cashback become in 5 or 10 years?
The small monthly contributions can add up over time. The following illustrations assume a 12% annual return. However, annual mutual fund returns are not guaranteed, and the final value may be higher or lower.
| Monthly investment | Total invested in 5 years | Estimated value after 5 years | Total invested in 10 years | Estimated value after 10 years |
| Rs. 500 | Rs. 30,000 | Rs. 41,000 | Rs. 60,000 | Rs. 1.16 lakh |
| Rs. 750 | Rs. 45,000 | Rs. 61.400 | Rs. 90,000 | Rs. 1.74 lakh |
| Rs. 1,200 | Rs. 72,000 | Rs. 98,200 | Rs. 1,44,000 | Rs. 2.79 lakh |
These are illustrative projections before taxes and other costs are applied.
The difference between earning Rs. 500 and Rs. 1,200 in monthly cashback is Rs. 700. If you do this regularly, then you will see a major difference over a decade. This is where stacking savings will help.
Final Words
Now that Rs. 600 cashback, which disappears into your next Amazon purchase, can become part of a long-term investment habit. So, the important step is to stop treating the cashback as money that needs to be spent. Now, start with four actions:
- Track your cashback
- Calculate your monthly average
- Choose an appropriate mutual fund
- Set an SIP amount to automate your investment.
You can also look for eligible coupon codes on DealsShutter before shopping, and combine them with bank offers where permitted. Also, set aside the money you save alongside your cashback.
Frequently Asked Questions
Is Rs. 500 a month too small to matter?
Ans. No, Rs. 500 per month can turn into to Rs. 60,000 in contributions over ten years. At an assumed 12% annualized return, it can grow to approximately Rs. 1.16 lakh.
What if I need the money before ten years?
Ans. Many open-ended mutual funds allow you to take out your money without a fixed maturity date. However, the exit loads, settlement timelines, and other conditions can apply. S
What if the market fails?
Ans. A SIP invests a fixed amount at regular intervals. So, you can buy more units when prices are less and fewer when prices are more. This is called rupee cost averaging.
What if I don’t have time to track a SIP?
Ans. You will always have the option to automate your monthly SIP through a bank mandate and review it from time to time. Automation reduces the need for manual transfers.
