SIP - Systematic Investment Plan in India

SIP for NRIs is a method of disciplined investment in market-linked funds like ULIPs and mutual funds. Various insurance companies, fund houses, and other financial institutions offer SIP investment funds to invest in India. This allows for disciplined and gradual investment over time, helping to mitigate the impact of market fluctuations and benefitting from rupee-cost averaging.

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Systematic Investment Plan (SIP)
CATEGORY SIP By Insurance Companies SIP By Fund Houses
RETURNS (Past 10 Years) 13.66%+ 14.48%+
LIFE COVER
TAX SAVING
Under 80C
On all plans
Only on ELSS
TAX
FREE MATURITY
BENEFIT
Under 10(10D)*

SIP Investment Plans For 2024

There is a wide range of systematic investment plans available these days. Let us take a look at a few top-performing funds that are apt for SIP investment in the year 2024 for NRIs.

  • Insurance Companies
  • Mutual Funds
Returns
Fund Name 3 Years 5 Years 10 Years
Top 200 Fund Tata AIA 26.56% 26.54%
20.86%
View Plan
Virtue II PNB Metlife 24.33% 22.69%
18.63%
View Plan
Pure Equity Birla Sun Life 22.64% 18.83%
17.7%
View Plan
Growth Opportunities Plus Fund Bharti AXA 19.93% 18.63%
17.36%
View Plan
Pure Stock Fund Bajaj Allianz 19.11% 17.33%
17.09%
View Plan
Blue Chip Fund HDFC Standard 15.73% 14.59%
14.41%
View Plan
Growth Super Fund Max Life 16.34% 15.13%
14.21%
View Plan
Multi Cap Growth Fund ICICI Prudential 17.16% 13.44%
13.72%
View Plan
Equity Fund SBI 16.39% 14.54%
13.61%
View Plan
Equity II Fund Canara HSBC Oriental Bank 15.5% 12.24%
11.85%
View Plan

Updated as on January 2024

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Returns
Fund Name 5 Years 10 Years RSI
Active Fund QUANT 27.62% 23.96%
21.08%
Large and Mid Cap Fund QUANT 23.27% 22.69%
19.64%
Flexi Cap Fund PARAG PARIKH 23.90% 20.22%
20.15%
Large and Mid Cap Fund EDELWEISS 20.32% 18.01%
16.76%
Equity Opportunities Fund KOTAK 20.22% 18.98%
17.44%
Large and Midcap Fund MIRAE ASSET 21.11% 24.56%
23.01%
Flexi Cap Fund PGIM INDIA 21.48% -
15.13%
Flexi Cap Fund DSP 19.48% 17.73%
15.82%
Emerging Equities Fund CANARA ROBECO 18.91% 22.92%
20.84%
Focused fund SUNDARAM 18.22% 16.55%
15.16%

Updated as on January 2024

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What is SIP?

The full form of SIP is a Systematic Investment Plan. An SIP plan is a popular investment strategy. It allows NRIs to invest regularly in mutual funds or ULIPs funds by contributing fixed amounts at scheduled intervals. SIPs for NRIs enable them to build wealth, achieve financial goals, and secure their future while residing outside India. 

When you opt for an SIP plan, you authorise the ULIP fund house, mutual fund company, or asset management firm to automatically deduct a predetermined amount from your bank account on the selected date at the chosen interval.

What are the Features and Benefits of SIP Investment in India?

Systematic Investment Plan (SIP) investments in India offer several features and benefits for NRIs:

  • Regular and Flexible Investing: SIPs allow NRIs to invest in funds by regularly contributing fixed amounts at predefined intervals, typically monthly. 

  • Rupee Cost Averaging: SIPs enable NRIs to benefit from rupee cost averaging. By investing fixed amounts at regular intervals, they buy more units when prices are low and fewer units when prices are high, potentially reducing the average cost per unit over time.

  • Diversification of Portfolio: SIPs offer access to a wide range of ULIP and mutual funds across various asset classes, including equity, debt, and balanced funds. NRIs can diversify their investment portfolio by spreading their investments across different types of funds.

  • Long-Term Wealth Creation: SIPs are well-suited for NRIs looking to build wealth over the long term. By staying invested and allowing their investments to grow over time, NRIs can benefit from the power of compounding.

  • Convenience and Automation: SIPs offer convenience and automation, as the investment amount is automatically deducted from the NRI's bank account at regular intervals. This eliminates the need for manual investment decisions and reduces the chances of missing investment opportunities.

  • Tax Benefits: Depending on the type of funds and the investment horizon, SIPs offer tax benefits to NRIs. 

  • Professional Management: SIP investments are managed by experienced fund managers who make investment decisions based on thorough research and analysis.

#You can use a ULIP calculator or Mutual Fund calculator to learn your particular SIP investments in ULIP plans and mutual fund schemes. 

How Does a Systematic Investment Plan Work? (SIP Investment Process)

Learn the workings of an SIP investment plan for achieving maximum return with minimum investment from the steps mentioned below:

  • Research the best SIP plans suited to your investment goals as an NRI.

  • Select a fund plan aligned with your financial objectives and risk tolerance.

  • Invest in either a Systematic Investment Plan (SIP) in a mutual fund or a suitable ULIP fund.

  • Determine the frequency and amount of SIP investments.

  • Complete KYC authentication and set up auto-debit for uninterrupted SIP investments.

  • Once activated, SIP funds are allocated to chosen ULIP or mutual fund schemes.

  • Fund managers diversify investments across stocks, bonds, and other assets based on scheme objectives.

  • SIP deductions purchase units at prevailing NAV on specified dates.

  • You have the flexibility to increase, decrease, or stop your SIP investment plan contributions at any time by providing the necessary instructions to the relevant fund house.

  • Use online tools like Policybazaar SIP calculator to estimate returns.

What are the Different Types of SIP Investment in India?

Below are the different types of SIP investments available in India for NRIs:

SIP Type Description
Regular SIP Invest a fixed amount at regular intervals.
Flexible SIP Flexibility to adjust the investment amount each month
Top-up SIP Gradually increase the amount invested each month.
Trigger SIP Invest based on a specific market event.
Perpetual SIP Invest indefinitely until stopped.
SIP with Insurance Combine SIP with life insurance coverage.
Multi SIP Invest in multiple mutual funds through a single SIP.

What are the Principles of a SIP Investments in India?

A Systematic Investment Plan (SIP) operates on two key principles: rupee-cost averaging and the power of compounding.

  1. Rupee-Cost Averaging:

    This principle refers to the practice of investing a fixed amount of money at regular intervals, regardless of the price of the investment. This helps to:

    • Reduce the impact of market volatility: By buying units at different price points, you avoid buying all your units at a peak and potentially benefiting from lower prices during market downturns.

    • Discipline your investments: Regular investments encourage consistent savings and prevent you from trying to time the market, often a losing strategy for most investors.

  2. Power of Compounding:

    This principle refers to the phenomenon where your returns are not only generated on your initial investment but also on the accumulated returns over time. The more frequently you invest (e.g., monthly in an SIP), the more compounding opportunities you create, leading to potentially significant long-term growth.

How to Choose the Best SIP Investment in India?

Tips for Choosing the Best SIP Investment in India for NRIs:

  • Duration: Aim for a minimum investment horizon of 5 years to gauge fund performance.

  • Fund House Reputation: Evaluate the track record and reputation of the fund house to assess market handling capabilities.

  • Asset Size: Consider a fund with at least Rs. 500 Cr. in assets as a benchmark for first-time investors.

  • Investment Goal: Align your investment objectives with the purpose and goals of the SIP plan.

  • Plan Selection: Choose SIP plans based on past performance and suitability to your financial goals.

  • Portfolio Diversification: Spread investments across multiple funds to mitigate market fluctuations.

  • Regular Review: Periodically review your SIP strategy to adapt to changing financial objectives.

How SIP Calculator Can Help You Calculate Your Returns on Investments?

An SIP Calculator is a financial tool used to estimate the potential returns on investments made through SIPs in ULIP funds or Mutual Funds. Users input details such as investment amount, frequency, expected rate of return, and investment duration to calculate projected returns over time. It helps NRI investors make informed decisions and plan their investment strategies effectively.

FAQ's

  • Is SIP better than FD?

    Yes, SIPs have the potential to offer higher returns compared to Fixed Deposits (FDs) over the long term. While FDs provide fixed returns at predetermined interest rates, SIPs allow investors to benefit from market fluctuations and potentially earn higher returns by investing in mutual funds or ULIPs.
  • Is SIP good for NRIs?

    Yes, SIPs can be a beneficial investment option for NRIs looking to build wealth and achieve financial goals. SIPs offer flexibility, allowing NRIs to invest in mutual funds or ULIPs from abroad and potentially benefit from market growth over time.
  • What if I invest Rs. 3,000 a month in SIP for 5 years?

    The outcome of investing Rs. 3,000 a month in SIP for 5 years depends on factors such as the performance of the chosen investment vehicle (mutual fund or ULIP), the prevailing market conditions, and the fund's historical returns. It's advisable to research and choose SIPs based on individual financial goals, risk tolerance, and investment horizon.
  • Which is better: SIP or one-time investment?

    One-time Investment SIP Investment
    You need to invest a lump-sum payment during the tenure of the investment plan. It includes periodic investments, where you can invest a fixed amount per month in the fund option of your choice.
    It earns better returns on investment at a time when the market is performing high. SIP investment earns better returns at a time when the market performs low
    One-time investment can result in a loss at the time of market fluctuation With the benefit of rupee cost averaging, SIP investment helps to deal with the market-variations

+For Mutual Fund midcap category Returns https://www.morningstar.in/tools/mutual-fund-category-performance.aspx & for Insurance midcap fund category Returns- https://www.morningstar.in/tools/insurance-fund-category-performance.aspx
*Past 10 Year annualised returns as on 01-12-2023
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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