One of the two ways to invest in mutual funds is through a systematic investment plan, or SIP. Investing a lump sum is an additional method of investing in mutual funds. You can spread out your investments over time and make small, frequent investments by investing in mutual funds through a SIP. Invest in direct mutual funds online today.
Let’s first understand mutual funds before moving on to SIPs. When a pooling entity (fund house or asset management company) combines investments from various retail and institutional investors with similar investment goals to buy securities, a mutual fund is created. Depending on how much equity they hold, mutual funds are broadly categorized as equity funds, debt funds, or balanced/hybrid funds.
First-time mutual fund investors should consider investing through a SIP because it will help them develop long-term financial discipline. Depending on your comfort level, the frequency of your SIP can be weekly, monthly, or quarterly. The SIP option is preferred by the majority of millennials because it offers them a lot of flexibility. Making an investment habit requires regular set aside of a fixed amount, which is what the best mutual funds for SIP force you to do.
Who Can Invest In SIPs?
SIPs are generally suggested for novice investors. You can get a taste of what mutual funds are capable of by investing in them through a SIP. Additionally, it would be best to begin to invest in direct mutual funds online if you are new to the world of equity-linked investments.
The requirement to arrange a lump sum is eliminated by investing through a SIP. As a result, you only need a small sum to begin your investment journey. There are plans for best mutual funds for SIP that enable you to make a monthly SIP investment of as little as Rs 100. Most other investment options do not offer this option.
Is SIP Investing Better Than a Lump Sum?
You must set aside a sizable sum of money, let’s say Rs 50,000, to invest in a lump sum. A lump sum investment in a mutual fund plan is similar to a deposit in a bank. On the other hand, you do not need a sizable amount to begin investing through a SIP. As previously mentioned, you can begin your investment career with as little as Rs 100 per month.
You must time the markets if you want to maximize the return on your lump-sum investment. Lump-sum investments should only be made when the markets have reached their lowest point and are expected to rise over the next few days. With a SIP, you can invest in direct mutual funds online without having to time the market because you will eventually benefit from rupee cost averaging.
Top SIP Plans In 2022
Equity Funds
| MUTUAL FUND | 5 YR. RETURNS | 3 YR. RETURNS | MIN. INVESTMENT |
| Quant Small Cap Fund – Direct Plan-Growth | 20.84% | 41.92% | 5000 |
| Aditya Birla Sun Life Digital India Fund Growth | 33.13% | 39.8% | – |
| Tata Digital India Fund Regular Growth | 34.23% | 39.65% | – |
| Quant Infrastructure Fund Growth | 26.2% | 37.08% | – |
| Motilal Oswal NASDAQ 100 ETF | 29.59% | 36.92% | – |
| PGIM India Midcap Opportunities Fund Regular Growth | 22.23% | 36.71% | – |
| Quant Small Cap Fund Growth | 22.22% | 36.56% | – |
| Motilal Oswal Nasdaq 100 Fund of Fund Regular Growth | – | 36.15% | – |
| Quant Infrastructure Fund – Direct Plan-Growth | 21.09% | 35.4% | 5000 |
| BOI AXA SMALL CAP FUND Direct Plan – Growth | – | 35.1% | 5000 |
Benefits of the Top SIP Mutual Funds
An SIP investment in mutual funds has many advantages. Some notable benefits of purchasing best mutual funds for SIP include the following:
Cost Averaging
You buy fewer units when the markets are booming and more units when the markets are trending downward. The cost of purchasing your fund units averages out over time and ends up being on the lower end. Consequently, you are not required to time the markets.
Small Investment.
As was already mentioned, using a SIP has eliminated the requirement that you have a lump sum available to begin your investment journey. 500 rupees is the customary minimum investment amount. You can invest in direct mutual funds online with as little as Rs. 100 each month. Thus, having an investible sum is not a roadblock to beginning your mutual fund investments.
Flexibility
You get the much-needed flexibility from SIPs. An SIP can be started or stopped at any time, and the fund house has no control over it. You might choose to temporarily pause your SIP if your finances are tight. All of these are free.
Conclusion
A methodical investment strategy is a quick and easy way to accumulate wealth. Depending on your objectives and risk tolerance, you can choose from a variety of investment plans or you can invest in direct mutual funds online through a fund of your choice. This list is entirely based on performance ratings; we do not offer any recommendations. Before investing in them, investors should perform their due diligence or seek the advice of a financial advisor.
