One of the exciting things about mutual funds is that they enable you to invest with very small amounts via SIP (Systematic Investment Plan). You can invest as low as Rs 500 per month too.
When you set up a SIP with any mutual fund, your account is debited a fixed amount every month. This amount is invested in a mutual fund of your choice.
Over a period of time, your investments accumulate and they keep growing.
In this article
How to Choose the Best SIP in India
There cannot be a ‘best SIP plan’ as SIPs are a mode of investment and not an investment product. Different subcategories under equity: large-cap, mid-cap, small-cap, ELSS etc. have the SIP option. Sub-categories under debt funds too, liquid funds, ultra short term funds and more have SIP options.
Hence it is logically difficult to single out the Best Sip in India. The right way to go about this is to find out which asset class suits you best according to your financial status and goals. You can apportion your funds accordingly once you know how much should you invest in equity and how much in debt.
Within equity and debt, there are more sub-categories. Pick the right category and use the SIP path for periodic investments. The best SIP plan for five years or more could get you healthy compounded returns if you hold your investment that long. This is especially important for SIP in equity funds as they are long term investments.
You will get the best SIP plan when you know which is the best mutual fund plan for you.
Best SIP Plans
We have sorted the best SIP Plans in India for 2020 of various mutual fund categories on the basis of three-year returns. However, this is not a recommendation for you and past performance is not indicative of future performance. Conduct the necessary due diligence before selecting a fund to invest in. We have used returns as a parameter just for information purposes.
|Canara Robeco Equity Tax Saver Direct Growth|
|Quant Tax Plan Direct Growth|
|Mirae Asset Tax Saver Fund Direct Growth|
|Axis Long Term Equity Direct Plan Growth|
|BOI AXA Tax Advantage Direct Growth|
|Axis Bluechip Fund Direct Plan Growth|
|Canara Robeco Bluechip Equity Fund Direct Growth|
|Edelweiss Large Cap Fund Direct Growth|
|BNP Paribas Large Cap Fund Direct Growth|
|Kotak Bluechip Fund Direct Growth|
|Axis Midcap Direct Plan Growth|
|Quant Active Fund Direct Growth|
|PGIM India Midcap Opportunities Fund Direct Growth|
|Invesco India Mid Cap Fund Direct Growth|
|DSP Midcap Direct Plan Growth|
|Axis Small Cap Fund Direct Growth|
|SBI Small Cap Fund Direct Growth|
|Kotak Small Cap Fund Direct Growth|
|Union Small Cap Fund Direct Growth|
|Nippon India Small Cap Fund Direct Growth|
|Union Dynamic Bond Fund Direct Growth|
|Quant Liquid Direct Plan Growth|
|Quant Money Market Fund Direct Growth|
|Franklin India Liquid Fund Direct Growth|
|IDBI Liquid Fund Direct Growth|
Ultra Short Term
|PGIM India Ultra Short Term Direct Growth|
|ICICI Prudential Ultra Short Term Fund Direct Growth|
|Mahindra Manulife Low Duration Fund Direct Growth|
|DSP Low Duration Fund Direct Growth|
|Aditya Birla Sun Life Savings Direct Growth|
Corporate Bonds Funds
|L&T Triple Ace Bond Direct Growth|
|Aditya Birla Sun Life Corporate Bond Fund Direct Growth|
|HDFC Corporate Bond Fund Direct Plan Growth|
|Axis Corporate Debt Fund Direct Growth|
|Kotak Corporate Bond Fund Direct Growth|
What are SIPs?
SIPs are increasingly becoming a favourite of investors because of evens out all the risks in the long term. In a SIP, you can invest a set amount every month or any other regular fashion. Say you invest Rs 500 per month.
If the market falls, the NAV of the mutual fund may also fall. This helps investors to get more units. If the market rises, the value of the units you have risen. This is how SIPs help even out volatility and this is also known as rupee cost averaging.
Say the NAV of a fund is Rs 10 per unit.
Month 1: For Rs 500, you will get 50 (500/10) units.
Month 2: 50 units
Say the NAV falls to Rs 5 because of market upheavals.
Month 3: For Rs 500 you will get 100 units
At this point you have a total of 200 units and the NAV is Rs 5. The value of your investment is Rs 1,000.
If at any point the NAv rises to Rs 15 per unit, the value of your investment will rise again.
This is what I meant when I said that SIPs help even out market volatility.
It has been more than a decade and a half since Franklin Templeton introduced the concept of SIPs in India in the 1990s.
Since then, SIPs have been instrumental when it comes to wealth creation.
A SIP gives an opportunity for beginners to enter the market with the desired level of risk.
Everyone has different financial priorities at different stages of life.
While you are busy planning your present financial needs, it is also important to plan your future financial requirements and it is a necessity to secure your family’s financial health at the onset of any unforeseen condition.
Few mutual fund houses may also provide an additional facility of life insurance cover to their investors who invest via SIPs. This is known as different names, SIP Plus, Century SIP or SIP Insure, such schemes have been there in the market since long.
What are its Benefits?
SIP helps you save and grow your money over a period of time.
Investing regularly for a long duration can help you accumulate a sizable corpus through compounding effects.
2.Achieving your financial goals
SIP is a useful tool for people who have a specific, future financial requirement.
By investing a specific amount every month; you can plan and may meet your financial goals, be it your child’s education, marriage or comfortable post-retirement life.
Having an adequate corpus to invest in a good habit.
But what is the use of money if you can’t use it when needed? SIP is one of the most liquid forms of investments and it can save you from a financially sticky situation when required
Things to Remember
There are a lot of factors you should look into before selecting a mutual fund scheme which will match your investment goals.
These are the few important things one must always remember before investing in mutual funds.
1.Higher rates: don’t blindly invest in the fund with the highest returns. Invest based on the duration you want to invest for.
- Every person’s financial condition is different. Evaluate the funds you invest in yourself – don’t invest in a fund because of its popularity.
- Direct plan for mutual fund gives you higher returns as compared to a regular plan of mutual fund schemes because of the absence of third parties but that also means that in the absence of advisory, you may have to do some research on your own.
- Review your investment from time to time but not too often. Once in a few weeks is good enough.
Also, there are various myths and false beliefs about mutual funds which circulate the market. The most successful investors are the ones that ignore the myths and pay attention to only what needs their attention.
The best thing about mutual funds is that they enable you to invest with very small amounts. Many people ask what is the minimum amount to invest in mutual funds?
There is no other way you can invest with reasonable diversification with an amount as low as Rs 100 and even Rs50. SIP ( Systematic Investment Plans) of a lot of mutual funds allow min investment with just Rs 100 and Rs 500.
Systematic Investment Plan (SIP) is an instrument which helps you avoid the risk of timing the markets and facilitate wealth creation in a disciplined manner by averaging the cost of Investments. Small savings create a big corpus for the future.
Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.