Share:

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 ₹500 and even ₹100.

And this can be done by investing in mutual funds via SIP (Systematic Investment Plan).

Let us understand the two terms and is they really differ from each other.

Invest in direct mutual funds

  • Enjoy 0% commission
  • SIP starting at ₹500

Mutual Fund vs SIP

SIP stands for Systematic Investment Planning. It allows you to invest systematically i.e weekly, monthly or quarterly based on your preference. Now you must have been thinking – where to invest?

With the help of SIPs, you are investing in mutual funds.

In other words, SIP is a tool by which you can invest in mutual funds.

SIP is a method of mutual fund investment and not a type or comparable investment instrument.

The other tool for investing in a mutual fund is a lump sum amount or one-time investment.

SIP  is a very smart and hassle-free way to invest in mutual funds. Unfortunately, many investors, especially new ones, think SIP is an investment by itself, while it actually is a way to invest in mutual funds.

Let us discuss it in detail.

A mutual fund is a financial instrument, which pools your and other investor’s money in the stock market if you opt for an equity mutual fund.

If you opt for a debt mutual fund, and the money is invested in treasury bills, Government Securities, Corporate Bonds and Money Market instruments. Your money is invested in a mix of stocks and bonds if you choose a hybrid fund.

So, if you do not wish to invest in the market directly or you do not want to take a high risk but want to invest in the market with low risk, then mutual funds offer you great schemes based on your needs and objectives.

To invest in these mutual funds, there are two methods you can choose from. First through a lump sum and second through Systematic Investing Plan (SIP).

A lump sum is a single large investment done by an investor in one go. A debt mutual fund is generally preferred for this kind of investment.

Whereas, an SIP is an option of investing a fixed sum in a mutual fund scheme on a regular basis i.e. predefined regular interval. It is similar to regular saving schemes like a recurring deposit.

It is a tested method of minimizing risk and yet enjoying good returns, by regular, periodic investment, over a long period of time.

 9 Reasons Why SIP Investment Is the Best Way to Invest

SIP is the ideal method to invest in the equity market as it involves staggering your investments over the whole financial year. It will help you to average the cost of purchase and beat volatility.

Also, it brings financial discipline to your life.

Hope you understand by now that an SIP is not a different type of investment. It is just another way of saying ‘monthly investment’.

There are several benefits of investing in Mutual Fund via SIPs i.e. a fixed amount every month:

  • Easier to save and invest: It is easier to save small amounts of money regularly than a big amount in one go. And create wealth using small investment.
  • Stock markets are volatile: Some months they are high and some months they are low. So investing each month averages out the purchase price.
  • Discipline: Saving and investing every month instills discipline in the investor to stick to a plan in spite of market ups and downs.
  • Fewer decisions: You don’t have to decide every month how much to invest and which funds to invest in.

Because of these benefits sometimes the popular media talks of SIPs as if they are an investment class of their own. But they are just another name for monthly installments in mutual funds.

5 Best Mutual Funds for SIP

Here is the list of 5 best mutual funds you can choose in 2018. This list consists of funds from every type of equity oriented mutual fund.

1. SBI Bluechip Fund

This is a Large Cap Equity Oriented Mutual Fund launched on January 1, 2013. It is a fund with moderately high risk and has given a return of 18.03% since its launch.

Returns per annum over the years from this fund are :

DurationReturns
1 year 15.01%
3 years 10.64%
5 years 20.68%

 

Rating by Groww4 star
AUM (Fund Size)₹17869 Cr
Minimum SIP₹500
Performance w.r.t its BenchmarkHas consistently outperformed its benchmark BSE S&P 100 since its launch.
Age of the fund5 years old
Expense Ratio1.35%

Despite its name, the fund tilts towards a multi-cap approach in its allocations.

It invests in the top 100 companies in terms of market capitalization, with the flexibility to invest up to 20% in mid-cap stocks.

This fund is one of the most popular large-cap funds available in the market.

2. Mirae Asset Emerging Bluechip Fund

This is a mid-cap equity oriented mutual fund launched on January 1, 2013.

It is a fund with moderately high risk and has given a return of 23.40% since its launch.

Returns per annum over the years from this fund are:

DurationReturns
1 year 16.45%
3 years 19.82%
5 years 32.34%

 

Rating by Groww5 star
AUM (Fund Size)₹5,364 Cr
Minimum SIP₹1000
Performance w.r.t its BenchmarkHas consistently outperformed its benchmark Nifty Free Float Midcap 100 since its launch.
Age of the fund5 years old
Expense Ratio1.73%

The standout feature of this fund is its ability to hold onto its five-star ranking without even a small blip since it made its debut in the ratings.

3. HDFC Small Cap Fund

This is a small Cap Equity Oriented Mutual Fund launched on January 1, 2013. It is a fund with high risk and has given a return of 23.99% since its launch.

Returns per annum over the years from this fund are:

DurationReturns
1 year 35.28%
3 years 24.84%
5 years 26.79%

 

Rating by Groww5 star
AUM (Fund Size)₹2152 Cr
Minimum SIP₹500
Performance w.r.t its BenchmarkHas consistently outperformed its benchmark NIFTY Smallcap 100 TRI since its launch.
Age of the fund5 years old
Expense Ratio0.93%

The standout feature of this fund is its ability to hold onto its five-star ranking without even a small blip since it made its debut in the ratings.

The scheme aims to provide long-term capital appreciation by investing predominantly in small-cap and mid-cap companies.

4. Motilal Oswal Multicap 35 Fund

This is a  Multi Cap Equity Oriented Mutual Fund launched on April 28, 2014.

It is a fund with moderately high risk and has given a return of 29.80 % since its launch.

Returns per annum over the years from this fund are:

DurationReturns
1 year 16.51%
3 years 18.96%
5 years NA

 

Rating by Groww5 star
AUM (Fund Size)₹11411 Cr
Minimum SIP₹1000
Performance w.r.t its BenchmarkHas consistently outperformed its benchmark NIFTY Smallcap 100 TRI since its launch.
Age of the fund4 years old
Expense Ratio1.49%

A very recent entrant to the category, this fund has delivered a good show in the three years since launch and also has a unique mandate.

It has recently entered the rankings with a five-star rating, making its debut with a bang.

5. Tata Retirement Savings Fund

This is a Hybrid Equity Oriented Mutual Fund launched in January 9.2013.

It is a fund with a moderately high risk and has given a return of 20.25% since its launch.

Returns per annum over the years from this fund are:

DurationReturns
1 year 15.27%
3 years 15.64%
5 years 22.50%

 

Rating by Groww4 star
AUM (Fund Size)₹574 Cr
Minimum SIP₹500
Performance w.r.t its BenchmarkHas consistently outperformed its benchmark CRISIL Hybrid 25+75 Aggressive Index since its launch.
Age of the fund5 years old
Expense Ratio1.52%

The fund seeks to provide a financial planning tool for long-term financial security for investors based on their retirement planning goals.

Following the 3 things you should always remember before investing in mutual funds:

  • 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.
  • Review your investment from time to time but not too often. Once a few weeks is good enough.

10 Tips on Investing in Mutual Funds

Happy Investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww. 

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.

 

Mutual Fund Calculator

SIP CalculatorPPF CalculatorEMI Calculator
Lumpsum CalculatorPF CalculatorCar Loan EMI Calculator
Mutual Fund Return CalculatorGratuity CalculatorPersonal Loan EMI Calculator
SWP CalculatorHRA CalculatorHome Loan EMI Calculator
Sukanya Samriddhi Yojana CalculatorCAGR CalculatorSBI EMI Calculator
FD CalculatorGST CalculatorSBI Personal Loan EMI Calculator
RD CalculatorHDFC EMI CalculatorSBI Home Loan EMI Calculator
NPS CalculatorHDFC Personal Loan EMI CalculatorSBI PPF Calculator
Simple Interest CalculatorHDFC Home Loan EMI CalculatorSBI RD Calculator
Compound Interest CalculatorHDFC FD CalculatorSBI SIP Calculator
Interest Rate CalculatorHDFC RD CalculatorSBI FD Calculator

 

Click to rate this post!
[Total: 0 Average: 0]
Share: