SIP Investment
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SIP Mutual Funds
A Systematic Investment Plan (SIP) is an insightful, simplified way to make mutual fund investments. This allows the investor to spend a fixed predetermined amount on a daily, monthly or quarterly basis at regular intervals. When investing in an SIP, you can invest a fixed amount in mutual funds over a period of time whether monthly or quarterly, thereby enjoying the power of compounding.
The Power of Compounding works best as the money you've spent earns interest over several years. The time on the market instead of timing allows you to create wealth at the end of the day. Therefore, long-term wealth creation would be a smart decision with a SIP investment policy.
SIP’s most prominent feature is that without worrying about market volatility and market fluctuation, you can invest for a long time. For every kind of investor the plan is perfect. SIP investment is the best way to get started if you're a newbie looking for a simple and safe investment path. SIP is still the safest way to invest some of your income compared to other investment types if you are a seasoned investor.
You must set your long-term and short-term financial goals before starting a SIP investment. Once you know what you want, choose the timeline you want and the amounts you need to invest. Selecting and buying the right type of mutual fund is the next and most important step.
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Best SIP Plans to invest in India
The best investment plans are made up of many types, and the individual invests in different schemes according to them. It is the investment type and method which means that the gains earned from them are dependent on the schemes' interest rates. For SIP investment, choosing such SIP mutual fund schemes is very critical.
Many companies offer different investment schemes in the SIP. Nonetheless, it is the investor's duty to find out the best plan to achieve optimum returns on investment in the future. Some of India's best SIP Mutual Fund plans include the following:
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Monthly investment of Rs 2500
BENEFITS OF SIP INVESTMENT
Convenient
Once the investor follows all the necessary requirements, the investor can easily engage in money depositing criteria's secure and smooth functions where they don't need to make any physical appearance. They can go through important features and sip mutual fund plans to make it easy to take advantage of the best long-term benefits.
Long-Term Gains
Your investments need time and compounding to build wealth. When you start early, you will have many years to grow a portfolio, so investing through equity SIP mutual fund gives you an advantage over a long investment period to grow a small fortune. Averaging costs and compounding returns also give you the double advantage.
Disciplined Approach
A SIP investment's fundamental strength is that it inculcates the investor's level of discipline. With a lot of enthusiasm, a number of people join the investment market but fall by the wayside if they suffer losses. This is where the SIP comes into play and you can conveniently spend a small amount each month without affecting the current budget for the household.
Power of Compounding
It involves reinvesting the interest or dividend and receiving additional units. You earn a return on your returns and the principal by doing such a thing. Your investment should rise at an increased rate when the principal is combined with the reinvested profits. Compounding is the best way to start saving and investing wisely as soon as possible. The sooner you begin to invest, the greater the power of compounding will be.
Fight Inflation
To stay in line with inflation, most investors choose to increase their contributions. Because inflation erodes your money's worth steadily, it may be wise to boost long-term contributions to an investment plan. The long-term compounding effect of SIP will help you overcome inflation with a comfortable margin.
Rupee-Cost Averaging
Rupee Cost Averaging, also known as RCA, is considered to be one of the major reasons investors consider investing using long-term SIPs. If investors channel the money flow into the fund on a monthly basis, this means that when the average price is low, more units or stocks will be allocated to the fund. If contemplating a long-term strategy, the RCA helps to maintain the fund's stability, and you can also reduce the fund's risk.
Why Choose Karvy
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Focused Recommendations: We recommend funds based on what you want to achieve from your investment.
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Only the Best: From over 8000 funds in the market, we research thoroughly and pick out the best ones, so that you don't have to go through that hassle.
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Security: Your money is completely secure and invested only in the funds that will give you long-term benefits.
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Safety: Your money remains yours as the investments are made under your name only.
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Convenient: With your bank account linked, it is easier to redeem the funds, as the redemption amount directly goes back to your bank account.
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Support: We are available for you for all your mutual fund related requirements and queries.
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Free: Having an investment account and investing is absolutely free for you, without any extra charges or hidden fees.
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Why to invest in SIP?
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Professional Management of funds
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No paper work
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Low cost of investment
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Highly liquid in nature
FAQS - Systematic Investment Plan (SIP)
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+I have invested in post office schemes and bank deposits, as I am comfortable with these avenues. My relationship manager is asking me to invest in SIP of equity funds. Is SIP suitable for me?
It is true that equity funds are more risky than post office schemes and bank deposits. However, one need to appreciate the fact that SIP reduces the volatility associated with equities as one does not enter into the market in one go. By avoiding equities, you can avoid the risk of volatility at the cost of lower rate of wealth creation. Consider the growth of value of Rs.5,000 per month over a period of 5 years in the table below. The wealth accumulated under SIP in Nifty is almost double than that under other avenues. If a 5-year period results in so much of difference imagine how much difference it can make to the growth of your savings over a period of say 10 or 20 years.
*Interest rate for recurring deposit in SBI has been considered if investment had been made five years ago.Investment avenue Rate of return Investment value of Rs.5000 per month after 5 years PPF 8.00% Rs. 3,67,069.89 Post Office Recurring Deposit 7.50% (compounded quarterly) Rs. 3,64,448.61 SBI Recurring Deposit 8.00%* Rs. 3,67,069.89 SIP in HDFC Balanced Fund 16.66%** Rs. 4,49,258.07
** XIRR if SIP is done on 5th of every month.You should also consider the point that if one stays invested with equities for long-term; the risk of losing money reduces. There is no doubt that Indian economy is expected to outperform all its peers in the next few years and as a result Indian Markets are also expected to have a great run. This means that one should expose himself to Indian equities through SIP.
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+Should aggressive equity funds like sector or thematic funds be considered for SIP or investment in relatively conservative equity funds like diversified or largecap funds would be better?
For SIP investment, both types of funds i.e. more aggressive funds (like thematic/midcap) and less aggressive funds (like diversified/largecap) could be considered. However, the key factor here is investment duration. If your investment duration is say, 3 years, then a less aggressive fund would be more suitable. However, if the investment horizon is 5 years or so, funds which are high on aggression could be preferred. Hence higher the aggression of the fund; more should be the investment duration.
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+There are also talks to daily SIP being more favourable than monthly SIP. As per your opinion, which method is more beneficial?
Daily SIP plan is being offered in the market by multiple AMCs, which allows an investor to invest a pre-fixed amount (as indicated by the investor) on a daily basis in equity funds. There are also daily STPs which allows an investor to invest a lump sum amount in a liquid scheme and later into an equity scheme. On daily basis, amount specified by the investor is transferred to equity scheme of the same AMC. Daily STP helps in capturing daily movements of the market, unlike regular SIPs where investments are made on a monthly basis. However, past data suggests that the difference in returns between these two modes is quite negligible in most cases. Hence, it cannot be said that daily SIP has beat monthly SIP. You can choose the method which suits you the most
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+Recommended schemes which could be considered for SIP
Conservative
Scheme Name Category NAV Returns(%) 2 Years 3 Years 5 Years Birla SL Equity Fund(G) Large-cap 552.00 15.98 32.25 18.73 L&T Equity Fund-Reg(G) Large-cap 65.41 12.30 23.72 14.55 SBI BlueChip Fund-Reg(G) Large-cap 31.656 17.02 27.42 19.14 Franklin India Prima Plus Fund(G) Multi-cap 480.86 17.37 28.19 18.29 ICICI Pru Balanced Advantage Fund(G) Balanced 28.47 11.79 19.75 15.36 SBI Magnum MidCap Fund-Reg(G) Mid-cap 68.35 25.99 41.98 25.30 Moderate
Scheme Name Category NAV Returns(%) 2 Years 3 Years 5 Years Birla SL Frontline Equity Fund(G) Large-cap 179.62 13.49 24.95 17.35 Franklin India Bluechip Fund(G) Large-cap 385.20 12.88 21.80 14.07 L&T India Value Fund-Reg(G) Multi-cap 27.30 20.13 35.64 22.16 Reliance Equity Opportunities Fund(G) Multi-cap 74.18 10.52 25.69 16.67 Mirae Asset Emerging BlueChip-Reg(G) Mid-cap 35.85 26.54 43.45 26.93 UTI Mid Cap Fund(G) Mid-cap 87.95 20.97 43.10 23.50 Aggressive
Scheme Name Category NAV Returns(%) 2 Years 3 Years 5 Years Reliance Growth Fund(G) Large-cap 868.13 15.95 29.07 16.19 Birla SL Pure Value Fund(G) Multi-cap 44.70 18.28 42.80 22.51 Franklin India High Growth Cos Fund(G) Multi-cap 31.17 17.54 32.27 21.94 Birla SL Small & Midcap Fund(G) Mid-cap 29.58 25.67 38.39 20.04 Canara Rob Emerg Eq Fund-Reg(G) Mid-cap 66.87 23.65 43.90 24.86 SBI Magnum MidCap Fund-Reg(G) Mid-cap 68.36 26.00 41.99 25.30 -
+What is a Mutual Fund?
A Mutual Fund is a body corporate registered with the Securities and Exchange Board of India (SEBI) that pools up the money from individual / corporate investors and invests the same on behalf of the investors /unit holders in Equity Shares, Government Securities, Bonds, Call Money Markets etc., and distributes the profits. In other words, a mutual fund allows an investor to indirectly take a position in a basket of assets.
Why should I choose to invest in a mutual fund?
For retail investors who do not have the time and expertise to analyze and invest in stocks and bonds, mutual funds offer a viable investment alternative. This is because:
- Mutual Funds provide the benefit of cheap access to expensive stocks.
- Mutual funds minimize the risk of investor by diversifying through investing in a basket of assets.
- A team of professional fund managers manages them with in-depth research inputs from investment analysts.
- Being institutions with good bargaining power in markets, mutual funds have access to crucial corporate information which individual investors cannot access.
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+Can mutual funds be viewed as risk-free investments?
No. Mutual fund investments are not totally risk free. In fact, investing in mutual funds contains the same risk as investing in the markets, the only difference being that due to professional management of funds, the controllable risks are reduced to a great extent.
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+What is SIP?
SIP is systematic investment plan, it a way to invest in mutual funds. In SIP on a specified date, a predefined amount is deducted from your bank account and invested in mutual fund scheme selected by the investor.
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+Can I stop or cancel my SIP?
Yes you can stop or cancel the SIP. AMCs don’t charge anything for cancellation or stop of SIPs.
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+In how many days SIP units are allotted?
It takes t+3 working days for unit allotment.
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+Can I save tax on SIP?
You can save tax only on ELSS (Equity linked savings scheme) SIP
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+What is the minimum amount for SIP?
One can start an SIP with a minimum of Rs. 500
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+Which is the best mode of investment in SIP?
There are 2 ways you can invest in SIP. One is offline another is online. The best way is online, because you can easily track value of your SIP investment at any point and stop, cancel or redeem you SIP with just 1 click.
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+Can NRI invest in SIP?
Yes, only USA and Canada residents are restricted by SEBI to invest in SIPs online.
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+How much should I invest in SIPs?
It completely depends on your requirement. Always use an SIP calculator to calculate SIP amount.
