SIPs or Systematic Investment Plans, recently have become quite famous amongst the investors and have emerged as the new investment option in India that possesses great potential in increasing the financial corpus.
Let us understand in detail the Systematic Investment Plans, how they work, their features and benefits, and what are the best SIP plans for 12 years in India.
What is SIP (Systematic Investment Plan)?
Investors new to the concept of investment in Mutual Funds often get confused as to what is SIP and how mutual funds are different from SIPs. Well, the answer is very simple if we understand the concept from the basics.
So, Mutual Funds are a pool of accumulated investments by various investors and institutions clubbed together to earn capital over a long term period. To invest in a mutual fund, investors are provided with 2 types of options:
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Lump Sum Method:
In the lump sum method, as the name suggests, the total investment is invested in the mutual fund at a one-time. An investor has to put in a significant amount at once creating a little financial pressure thus becoming a less preferred choice.
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Systematic Investment Plan Method:
One of the significant reasons why SIPs are the trending method of investment and gaining popularity amongst the masses is the fact that a fixed amount is deposited in a Mutual Fund scheme of the investors’ choice at regular intervals for a pre-defined period of time. If investments are made wisely after understanding the background of the mutual fund in SIP, great returns are expected in the long term.
Some of the main reasons why an investor should consider investing in a SIP rather than any other investment options are:
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It develops a regular savings habit and brings financial discipline in an investor’s life
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It is an investment plus savings scheme
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Sometimes some of the Systematic Investment Plan’s monthly minimum installment is as low as Rs. 500
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Helps in managing the financial burden during the crisis
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It helps in building a significant financial corpus even after retirement
Top Performing SIP Mutual Funds in India
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Best Equity Funds
| Mutual fund |
5 Year Returns |
Minimum Investment |
| Aditya Birla Sun Life Digital India Fund - Growth - Direct Plan |
31.47% |
Rs. 1,000 |
| Aditya Birla Sun Life Digital India Fund Growth |
33.13% |
- |
| BOI AXA SMALL CAP FUND Direct Plan - Growth |
-- |
Rs. 5,000 |
| ICICI Prudential Technology Fund - Direct Plan - Growth |
32.37% |
Rs. 5,000 |
| Kotak Small Cap Fund - Direct Plan - Growth |
21.39% |
Rs. 5,000 |
| PGIM India Midcap Opportunities Fund - Direct Plan - Growth |
21.77% |
Rs. 5,000 |
| Quant Infrastructure Fund - Direct Plan - Growth |
24.71% |
Rs. 5,000 |
| Quant Infrastructure Fund Growth |
26.20% |
- |
| Quant Small Cap Fund - Direct Plan - Growth |
22.92% |
Rs. 5,000 |
| Tata Digital India Fund Regular Growth |
34.23% |
-- |
Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer. The tax benefit is subject to changes in tax laws. *Standard T&C Apply
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Best Debt Funds
| Mutual fund |
5 Years Returns |
Minimum Investment |
| Aditya Birla Sun Life CEF - Global Agri Plan - Growth-Direct Plan |
10.24% |
Rs. 1,000 |
| DSP Healthcare Fund - Direct - Growth |
- |
Rs. 500 |
| ICICI Prudential BHARAT 22 FOF - Direct - Growth |
- |
Rs. 5,000 |
| ICICI Prudential India Opportunities Fund Direct Plan - Growth |
- |
Rs. 5,000 |
| ICICI Prudential Multicap Fund - Dividend |
11.91% |
Rs. 5,000 |
| ICICI Prudential Ultra Short Term Fund - Direct Plan - Daily IDCW Payout |
- |
Rs. 5,000 |
| IDFC Government Securities Fund - Constant Maturity Regular - Growth |
9.56% |
- |
| IDFC Government Securities Fund - Investment Plan - Regular Plan - Growth |
8.11% |
- |
| Nippon India Gilt Securities Fund - Direct Plan Defined Maturity Date Option - Growth |
8.73% |
- |
| Nippon India Nivesh Lakshya Fund - Regular Plan - Growth |
- |
- |
Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer. The tax benefit is subject to changes in tax laws. *Standard T&C Apply
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Best Hybrid Funds
| Mutual fund |
5 Yr. Returns |
Min. Investment |
| BOI AXA Mid & Small Cap Equity & Debt Fund - Direct Plan - Growth |
16.92% |
Rs. 5,000 |
| BOI AXA Mid & Small Cap Equity & Debt Fund Regular Growth |
17.61% |
- |
| ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund Direct Plan - Growth |
- |
Rs. 5,000 |
| ICICI Prudential Thematic Advantage Fund (FOF) - Direct Plan - Growth |
15.90% |
Rs. 5,000 |
| ICICI Prudential Thematic Advantage Fund(FOF) Growth |
17.96% |
- |
| Motilal Oswal Nasdaq 100 Fund of Fund - Direct Plan - Growth |
- |
Rs. 500 |
| Quant Absolute Fund - Direct Plan-Growth |
20.49% |
Rs. 5,000 |
| Quant Absolute Fund Growth |
20.35% |
- |
| Quant Multi Asset Fund - Direct Plan-Growth |
19.30% |
Rs. 5,000 |
| Quant Multi Asset Fund Growth |
18.66% |
- |
Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer. The tax benefit is subject to changes in tax laws. *Standard T&C Apply
Why You Should Invest in SIP?
If an investor does not want to engage in high risk-taking investments and at the same time wishes to create a financial corpus after retirement, SIP investment can be considered as one of the smartest ways of investing. Here are some reasons why investing in a SIP will work wonders for you in the long term future:
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Higher Returns
If the investor studies the history of a mutual fund carefully before buying SIPs and purchases them accordingly, higher returns are guaranteed after a significant time period, say 12 years. The top performing SIPs these days have shown a remarkable growth of 18% to sometimes even more than 20% in a span of 12 years or 15 years which is way more than any other investment option available in the market.
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Rupee Cost Averaging
As it is a known fact that the financial market is volatile in nature hence, rupee cost averaging allows investors to buy:
SIPs are beneficial for investors who invest in more shares at less price rather than investors who invest a large sum in just one share.
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Affordable
Systematic Investment Plans are considered affordable as one can invest an amount as low as Rs. 500 monthly. These regular investments as per the investors’ wish and affordability, do not cause a hole in their pocket unlike in the case of the Lump Sum method of investment where the investor deposits the complete amount at once.
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Portfolio Diversification
A SIP investor can put their money in multiple SIP plans for 20 years or 10 years instead of putting all the money in just 1 investment option. This kind of investment helps in the portfolio diversification of the investor and also increases the probability of better and higher returns after the long term period.
In The End!
One can easily invest in SIPs online these days from any reputed company. It is very important to have a piece of in-depth knowledge about the SIP the investor is planning to purchase. From low risk to high risk, from short term to long term, every SIP is available in the market but the question arises as to what factors should be taken into consideration before making the buy? So, an investor should always:
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Research about the reputation of the fund house of the desired SIP
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The net asset value
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The historic returns of the chosen Systematic Investment Plan
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The risk involved in the SIP
