What are the Best SIP plans in India

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Through an SIP, you can invest in mutual funds in a systematic and automated fashion. Since you get your salary paid on a monthly basis, it is best to stick to a monthly SIP plan, especially if you are new to investing.

In an SIP, a fixed amount is auto-debited from your bank account on a particular date every month. The money gets automatically invested into one or more mutual funds of your choice.

If you are new in the field of investment, it is natural for you to feel confused initially. You may find it difficult to decide which mutual fund you should invest in. In that case, it is best to ask the relationship manager from your bank to send you a list of all available mutual funds along with their returns. Also, ask your relationship manager to suggest a mutual fund for you to invest in. However, you can also find this information online easily and make the decision for yourself.

Through a simple Google search, it will pull very easy for you to check out all mutual funds in India along with their historical returns. Ensure that the mutual fund(s) you select meet the following criteria:

  • The total Corpus, or the asset size, of the mutual fund is large. 500 Crores is a good reference point. Of course, there are outstanding mutual funds that do not have 500 Crores in assets, but if you're a newcomer, this a good general rule of thumb. 
  • The mutual fund has been in duration for at least 5 years (the longer, the better). 
  • Always choose a reputed fund house. There are several fund families or fund houses in India such as Reliance, HDFC, SBI, Birla Sun Life etc.. So, if you are able to recognize any of them, you are probably good to go. 
  • SIP should be in conjunction with your bank. If it is not, you need to contact the relationship manager of your bank and he will get you set up. 

How SIP works

SIP works in a systematic way allowing you to invest on a monthly basis. For instance, let’s say your monthly salary is Rs. 60,000/- and you set aside 10% of your monthly salary towards an SIP. A detailed investigation on the largest mutual funds in the country will help you see how a number of funds have consistently outperformed the overall market over a large period of time. Take for example SBI blue Chip Fund. It is one of the largest mutual funds in India, which was launched in June 2006. The fund has over Rs. 1000 Cr. in assets and this was achieved within a period of 10 years.

If you have started investing in this plan through SIP from June 2006, Rs. 6000 will be   automatically taken out from your fund every month. The money will be invested into the fund on a monthly basis. This is exactly how we take care of the two basic tenets of investments as mentioned above- consistency and discipline. As SIP automatically takes out Rs. 6000/- every month, the consistency of investment is maintained. This also ensures a disciplined investment as the mutual fund company invests the money on your behalf.

The major advantage of SIP investment is the power of compound interest. Rs. 6000/- that you keep aside every month, accumulates over the years to turn into a huge amount of money. For example, if you have started investing from June 2006, then till March 2015, the number of times Rs. 6000 has been auto-deducted from your account is 106.  So, total Rs. 636,000/- ( Rs. 6000 x 106) has been auto-debited from your account and got invested in the Capital market.

You will get something close to 17% as the overall return (annualized compounded return). 

1,40,81,09/-  So, your investment gets doubled in value. Better yet, the Sensex that gauges the performance of the market goes up in value by 188% during those 104 months of investment. However, this mutual fund goes up in value by more than 300%. In general, a good mutual fund always and consistently outperforms the market.

How to Get Started 

The best way to get advantage of SIP is to just get started. If you are not an expert in market timing, no need to worry because, SIP takes care all of your investment needs. Just contact the relationship manager of your bank and let them know that you want to start investing through SIP. You can also buy mutual funds online. There are a number of mutual fund companies available. So do a little research and start investing in SIP as early as possible.

Where to Invest

If you are looking for the best SIP plan in India, check the past few years’ performances of the funds to choose the best one. Based on our research we have shortlisted five best SIP Plans in India. Let’s have a look in the table below: 

SIP scheme

5 years’ return

3 years’ return

Birla SL Frontline Equity Fund (G)

17.29%

21.74%

SBI Blue Chip Fund-Reg (G)

18.82%

22.74%

Franklin India Prima Plus Fund (G) 

17.29%

24.55%

Mirae Asset India Opportunities Fund-Reg(G) 

18.88%

24.37%

HDFC Mid-Cap Opportunities Fund (G) 

24.77%

33.33%

 

Based on the market performance and the return rate of last three to five years, we have sorted out the schemes above. Among these five schemes, let us discuss the top two schemes. 

Birla SL Frontline Equity Fund (G) 

Birla SL Frontline Equity Fund is another open-ended growth scheme. It is best for people whose investment objective requires long-term growth of capital, in which a portfolio with a 100% equity-linked portfolio aims at being as diversified across various sectors and industries as its chosen benchmark index, BSE 200. 

SBI Blue Chip Fund-Reg (G)

SBI Blue Chip fund – Reg (G) is an open-ended growth fund in which the minimum amount required for investment is Rs.5000. The fund is the best for investors with long-term goal in mind. The fund invests in a diverse basket of equity stocks of various companies the market capitalization of which is equal to or more than the least market capitalized stock of BSE 100 index. The fund is predominantly large-cap.  The absolute return on Investment of this fund has been 27.7%.  Since, it is an equity-linked fund; the investment associated risk is quite high in it. 

These two schemes are considered the best SIPs in India because of the very high rate of return in the past few years.  So, if you want to create wealth for future, investing in a SIP would be the best bet for you.

You may also like to read: How to invest through SIP?

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