Best SIP Mutual Funds
What are the Best SIP Mutual Funds?
Mutual funds are investment instruments that pool funds from a number of investors and invest the same in different types of securities to generate higher returns. Mutual funds offer you to start your investment journey through a SIP. A Systematic Investment Plan or SIP is a way that enables investors to invest a fixed amount in a fund scheme periodically, i.e; weekly, monthly, or quarterly. The best SIP plans in mutual funds allow investors to enjoy higher returns through long term investment.
Benefits of Investing in the Best SIP Mutual Funds
SIPs are recommended for first time mutual fund investors. The best SIP to invest in gives investors significant perks.
Suitable for Low Capital Investors
We have seen how the year 2021 has seen a surge in the number of retail investors in the market. Most of these first time investors are individuals who have limited savings but are aware of the benefits of long term investment. The best SIP to invest in 2022 enables these low capital investors to generate higher returns in the long term using their limited monthly savings. An investor can start a SIP with an amount as low as Rs 100.
Rupee Cost Averaging
You can enjoy the benefits of the Rupee cost average by investing in the top mutual funds for SIP. You can increase your SIP investments when the market is in a downtrend and decrease when the market is booming. This allows you to average the cost of fund units over time.
Option to Diversify
You can start SIP in almost all mutual fund schemes. You can choose a number of the best funds for SIP and divide your investment amount in each of them as per your investment plan. This allows you to contain market risks and earn steady returns even during downtrends or high market volatility. Keep your SIP investment portfolio diversified by investing equity funds, debt funds, and hybrid funds.
Flexibility
The best SIP investment plan gives you complete control over your investments. You can start a SIP or exit one anytime you wish. You can also pause a SIP and resume it on a later day in the future. No other investment method offers you this level of flexibility.
Compounding
SIP investments are meant for the long term. The time period of investment matters more than the amount you are investing. Your periodic investments in a SIP keep on compounding over the years to generate substantially higher returns. Hence, it is recommended that you start investing in mutual funds through SIP as early as possible even though you have very tight savings.
Imparts Financial Discipline
Discipline is the most important thing that you need to learn while investing in risk-bearing instruments. SIPs allow you to learn financial discipline that can help you with other investment ventures as well.
How Can You Earn Higher Returns in the Long Term through Best SIP Mutual Funds?
The underlying principle for investing in mutual funds SIP is to keep investing a fixed amount periodically for the long term. Recurring investments help you to keep adding a fixed amount to the principal investment. This method of investment offers you to enjoy substantially higher returns through the power of compounding. Let us have a look at how compounding can increase your returns exponentially.
Suppose you choose to invest in one of the best mutual funds for SIP in 2021. You will keep on investing Rs 5,000 per month in the fund for an indefinite period and let’s say that the fund scheme can offer 15% annual returns.
| Number of Years | Invested Amount | Future Value of SIP | Return in % |
|---|---|---|---|
| 1 | Rs 60,000 | Rs 64,301 | 7.1 |
| 3 | Rs 1.8 lakh | Rs 2.26 lakh | 25.5% |
| 5 | Rs 3 lakh | Rs 4.43 lakh | 47.6% |
| 10 | Rs 6 lakh | Rs 13.76 lakh | 129% |
| 20 | Rs 12 lakh | Rs 74.86 lakh | 524% |
As you can see, even though the average annual return of the mutual fund scheme is 15%, the returns offered through the SIP mode of investment can become more than 5 times the principal amount in the course of 20 years.
Now, let us take a few SIP plans into the example and see what returns they can offer in a 5-year time period.
| Mutual Fund | Past 5-Year Annual Return of the Fund | Invested Amount | Value of SIP at the End of 5 Years | Return Earned Through SIP |
|---|---|---|---|---|
| ICICI Prudential Technology Direct Plan Growth | 35.2% | Rs 3 lakh | Rs 8.54 lakh | 184% |
| Aditya Birla Sun Life Digital India Fund Direct Growth | 34.3% | Rs 3 lakh | Rs 8.06 lakh | 168% |
| Tata Digital India Fund Direct Growth | 36.2% | Rs 3 lakh | Rs 8.35 lakh | 178% |
| SBI Technology Opportunities Fund Direct Growth | 30.8% | Rs 3 lakh | Rs 7.49 lakh | 149% |
| Quant Infrastructure Fund Direct Growth | 27.9% | Rs 3 lakh | Rs 6.9 lakh | 130% |
The above figures show how much you would have earned only in 5 years from your monthly investment of Rs 5,000 in the best SIP mutual funds for 5 years.
English 
हिन्दी