A SIP, or systematic Investment Plan, allows you to put a little amount in the right mutual fund scheme on a monthly basis. A fixed sum is withdrawn from your bank account every month when you activate a SIP, and it is invested in the mutual fund of your choice. So, today in our blog we are going to reveal the best mutual fund in India for SIP (For beginners). If you are a beginner and want to build an investment habit then SIP might be the start for you. So let's take a look at how many mutual funds in India for SIP investment are there. SO it's 7, we are going to discuss 7 best mutual funds for SIP
We all know that slow but steady wins the race, same goes with the magic of Systematic Investment Plans (SIP), it does not inculcate the habit of investing regularly but also helps in achieving different financial goals like children’s education, their marriage, owning a dream house & building retirement corpus, etc. Creating wealth requires discipline, persistence, and the grit to remain invested as per risk profile. Thus, lumpsum investment & timing the market is not required for achieving different financial goals & creating wealth.
A systematic Investment Plan (SIP) is a method to invest a fixed amount regularly in a best mutual fund scheme/ equity stock. Thus, it allows to make the most of the growth potential, by investing periodically (monthly, quarterly, or semi-annually) and benefiting from Rupee Cost Averaging. So, before we start about the best mutual funds in India for SIP let's understand the benefits of investing in mutual funds SIP.
SIP can be a convenient mode of investing. Like most investors, you may not have the time for extensive market research and analysis to adjust or rebalance your portfolio. Hence, once you select a good fund, you can give standing instructions to the bank and let the SIP take care of your monthly investments.
You can invest in mutual funds through a SIP with just Rs. 500 per month. This can be an affordable way to invest each month without hurting your wallet. You can increase your monthly investment amount with a rise in your income via the SIP step-up facility. AMCs allow investors to top up their SIPs on a regular basis. So, even if you start with Rs. 500 or Rs. 1,000 every month, you can invest more over the years. This strategy can help you reach your investment goals at a faster rate.
Staggered investment imparts financial discipline to your life by investing a fixed amount automatically at a fixed interval. Thus, an assured long-term growth for your money can be achieved with a regular and systematic investment approach.
Investing a fixed amount every month helps you tide over market highs and lows & brings down your average cost per unit. Thus, you buy more units when the market is low and less when the market is high. Over a period of time, the cost per unit averages out and usually places the investment in a position to earn good returns.
When you invest over a long period and earn returns on the returns earned by your investment, your money would start compounding. This can help you to achieve your long-term financial goals. This also means that you can benefit more by investing as early as possible. Even a ten-year head-start can have a major impact on your returns. It would be easy to understand with the help of the following chart, which clearly shows that the investor would have made Rs 99 lacs over a period of 20 years by investing Rs 24 lacs through SIP (Rs 10,00/month) & investment corpus would have grown to Rs 3.49 Cr with the investment horizon of 30 years.
Return assumed above is for illustration purposes only & actual returns may vary depending on the market volatility.
Therefore, the earlier you start investing, the higher is the probability that you could grow your final corpus significantly & achieve your financial goals easily. SIP investment can also help you save on tax if the investment is done in ELSS schemes. To meet the investment goals, there are different types of SIPs available in the market.
Flexible or flex SIP works on a pre-decided formula, which enables the investors to invest more when the markets are falling and go for a lower SIP amount when markets are high.
For example, the Flex SIP option launched by Kotak Mahindra AMC uses the P/E Ratio of the Nifty 50 for the same purpose. By default, it will invest three times the SIP amount if the P/E ratio becomes equal to or falls below a specified level. The good part is that you can specify the amount in the application form to be invested in both scenarios when the equity markets are low or high.
Step-up or top-up SIP allows you to increase the SIP amount at fixed intervals.
For example, you might start investing with Rs. 10,000 SIP in a mutual fund scheme and instruct the fund house to increase the SIP amount by Rs. 1,000 after every three months.
With the triggering SIP, you get to set a trigger for your SIP investment. For instance, you can mention that your SIP amount should be withdrawn from your bank account and used to purchase units of the selected scheme only if the NAV of the scheme falls up to a certain level decided by you.
You get other trigger options such as specific dates and even levels of an index like Nifty or Sensex. But, this option is recommended only for experienced investors who have the knowledge and experience to set such triggers effectively.
Every SIP with no end date mentioned in the mandate turns into a perpetual SIP, which will run until 2099. However, you do get the option to stop the SIP by communicating it to the fund house. And for SIP investment with a fixed tenure, you should enter the SIP end date in the mandate.
7 best mutual funds scheme for SIP in India 2021
Please find below some of our MF scheme suggestions for SIP investment with details:
Systematic investment as per risk profile can boost your portfolio returns significantly. Our experts are always there to guide you on your investing journey. Please explore our website to find out more investment opportunities.
A SIP, or systematic Investment Plan, allows you to put a little amount in your favorite mutual fund scheme on a monthly basis. A fixed sum is withdrawn from your bank account every month when you activate a SIP, and it is invested in the mutual fund of your choice.
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