SIPs help you lower the risk of market fluctuations while making it affordable for the younger working class to invest in the equity market. By investing just Rs. 5000 every month in an SIP, you can create high returns to meet your long-term goals. A systematic investment plan allows you to invest a monthly sum in a single type of fund, be it equity, debt, gold, etc.Read more
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You can choose to diversify by investing in different types to balance out the risk. A key advantage of SIPs is that you can monitor how the funds are performing based on which you can either increase or decrease the amount of investment. However, in order to enjoy higher returns, you should ideally stay invested for a minimum of 5 years. You can use the SIP calculator to analyse the SIP returns.
Here is a look at a mix of equity and debt funds that you can explore to start a monthly SIP of Rs. 5000.
|Fund Name||Category||Type||5 Year Return||Risk Profile|
|ICICI Prudential Technology Direct Plan Growth||Equity||Sectoral / Thematic||28.82%||Very High Risk|
|Aditya Birla Sun Life Corporate Bond Fund Direct Growth||Debt||Corporate Bond||7.45%||Moderate to low risk|
|Axis Small Cap Fund Direct Growth||Equity||Small Cap||20.12%||Very High Risk|
|Tata Digital India Fund Direct Growth||Equity||Sectoral / Thematic||30.04%||Very High Risk|
|ICICI Prudential Short Term Fund Direct Plan Growth||Debt||Short Duration||7.59%||Moderate to low risk|
|Mirae Asset Tax Saver Fund Direct Growth||Equity||ELSS||16.63%||High Risk|
|Quant Tax Plan Direct Growth||Equity||ELSS||22.73%||High Risk|
|Mirae Asset Emerging Bluechip Fund Direct Growth||Equity||Large & Mid Cap||15.52%||Very High Risk|
Plans should be opted for by assessing how much risk you are willing to take and what goals you are trying to accomplish. The following sections offer deeper insight into the different categories to help you choose the best monthly SIP plans for Rs. 5000.
Equity funds are those that invest in stocks and shares of a company. Depending on the performance of the company, the value of the funds goes up or down. This difference is what determines your returns at the base level.
Sectoral / thematic funds invest in the stocks of companies belonging to a particular niche. For instance, the ICICI Prudential Technology Fund and the Tata Digital India Fund invest largely in the equity of tech or IT companies. The 3-year annualized return for each fund is 34.25% and 31.11% respectively. A monthly SIP of Rs. 5000 in each of these funds for at least 3 years can increase your investment of Rs. 1.8 Lakhs to over Rs. 3 Lakhs.
Funds that invest in the equities of large companies (ranking in the top 100 per SEBI guidelines) are large cap funds. Similarly, small cap funds are those that invest in companies ranking above 250. Mid-cap funds fall in the range between. The greater the market capitalization of a company, the more likely it is to get steady consistent returns.
The 3-year annualized return for the Axis Small Cap Fund is 30.08%. For Mirae Asset Emerging Bluechip Fund, which invests in a mix of large and mid-cap companies, it is 21.18%.
These are primarily equity-based investments, however, these come with tax benefits under section 80C of the Income Tax Act, 1961. A monthly SIP of Rs. 5000 in such funds can help you save on taxes on the extra income earned through the returns on investments.
Both Quant Tax Plan and Mirae Asset Tax Saver Fund come with a lock-in period of 3 years during which you cannot withdraw any funds. Their 3-year annualized returns are 36.82% and 20.61% respectively.
Debt funds are low-risk in nature, and subsequently, the returns are lower than equity instruments. Ideally, investors should split their SIP investments into both equity and debt to generate decent returns while erring on the side of caution.
A monthly SIP plan for Rs. 5000 can give you increased returns if you continue to stay invested for 5 years or more. Given the range of options available, stick to safer options such as hybrid funds and large-cap funds if you have just started out. As you start to understand more, gradually increase the investment amount and move towards a diversified portfolio comprising of both equity and debt funds.
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