One of the most important benefits of SIP or Systematic Investment Plan in opposition to lump-sum investment is that it allows you to invest regularly but periodically. While inculcating a habit of investing and financial planning, it helps in long term wealth creation. With investments starting as low as Rs. 500, you can easily set up a SIP with any mutual fund of your choice, and let your worries aside as the amount is debited automatically from your bank account every month.
Which Are the Best SIP Plans?
Determining the best SIP plan depends solely on your financial status and goals. There are many options to choose from, and it is vital that you pick the right category after careful consideration and research.
If you know how much you can invest in equities and debt, you can divide your funds accordingly. Under the main categories of equity and debt, there are several subcategories. If you want a long-term investment, the best SIP strategy will be for five or more years that brings you healthy combined returns.
If you know the best mutual fund scheme for you, you can get the best SIP plan. Since the best SIP is a very relative term, below are some factors you need to check out when choosing a SIP. Additionally, don’t forget to use a SIP return calculator to measure your returns before investing.
● Your objective
Right when you decide to invest, you need to set your goals clear. Answer for yourself— “do you want to invest for the long term or short term?”, “how much risk are you willing to take?” Depending on what your answer is for these questions, you should decide what to invest in. For instance, if you are not a risk-taker and want consistent returns, debt funds might be more your thing. On the other hand, if you are in for the long haul and are comfortable with market volatility and its predictions, equity funds should be your investment avenue.
● The fund type
Based on the risk profiles, there are several types of mutual funds you can invest in.
Mutual funds are broadly classified into 2 main categories— asset-based mutual funds and structure-based mutual funds. Asset-based mutual funds are further classified into equity funds, debt funds and balanced funds. Structure-based mutual funds are also classified into open-end and closed-end funds. Choose them strictly based on your risk profile.
● Past performance & returns
It is essential to keep in mind and carefully research the funds’ performance in the past 3-5 years. A comparison will help you understand how strong or weak a fund is and how much market volatility it can withstand. Study the trends over the past 5-10 years before making any investment.
Best SIP Investment Plans 2021
|Fund Name||3 Year Returns||Link|
|Axis Long Term Equity Fund||4.86%||Invest Now|
|ICICI Prudential Bluechip Fund||0.54%||Invest Now|
|DSP Tax Saver||-0.40%||Invest Now|
|Franklin India Equity Fund||-4.17%||Invest Now|
|ICICI Prudential Value Discovery Fund||-2.73%||Invest Now|
|Nippon India Tax Saver (ELSS) Fund||-11.38%||Invest Now|
|DSP Equity Opportunities Fund||-1.23%||Invest Now|
|Motilal Oswal Long Term Equity Fund||-1.75%||Invest Now|
|Aditya Birla Sun Life Pure Value Fund||-11.95%||Invest Now|
|HDFC Equity Fund||-3.98%||Invest Now|
Once you get these pointers right, any SIP can become the best SIP for you. Even better, use this SIP Calculator by CRED, and find out for yourself how your chosen plan will perform, and invest accordingly.