home > BLOG > Everything You Must Know About SIP Mutual Funds - Gill Broking

Everything You Must Know About SIP Mutual Funds - Gill Broking

 17 Oct 2019

Systematic Investment Plan, abbreviated as SIP, is one of the convenient and popular investment methods where the fixed investment amount is deducted from the investor's account every month. This method is especially preferred by investors who are not ready to invest all their savings in one go i.e. using the lump-sum investment approach.

SIP is a flexible investment approach as it helps investors to fix the monthly payment option according to their financial condition. They can also make adjustments to this payment plan later. For example, if the market is not going in favor of the investor; they can put off the investment until the next installment date. This way, they can leverage the full benefits of mutual funds.

The Working of SIP

 

According to your preference and budget, you can fix the installments on a quarterly, monthly, or weekly basis. You must complete the bank mandate as well as the SIP form to activate this payment mode. Once you have chosen SIP, the fixed installment amount will automatically be deducted from your bank account and transferred to the mutual fund account.

Why You Should Choose SIP Investment Plan Over Lump-Sum?

 

If you compare the mutual fund's investment plans, then SIP investment seems the most convenient and better option. The reason is pretty simple: You can expect a higher rate of return with the SIP investment option than the lump-sum. Now that you have to process the payment every month or week; you can enjoy a great amount of flexibility in terms of fixed installments and regular investment. According to the current market condition, you can plan your investment. For example, you can invest more during the low market phase and less during the inflation period. This way you get higher returns on lower investments.

On the other hand, you cannot control the market when you choose a lump-sum investment plan. There is no certainty whether or not the market will work in your favor. If you invest all your savings at once, you are at high risk of losing a large capital if the market fails to perform as per your expectations.

Another reason why SIP investments are considered better options than the lump-sum plan is their flexibility. You can start your account for as low as Rs 500/- if you choose the SIP investment plan. However, you need at least Rs 5,000 to start the lump-sum mutual fund's investment account.

Finding the Right Mutual Funds to Invest Through Systematic Investment Plan

 

In this post, we'll walk you through the best mutual funds that can earn you high returns. These mutual funds options can prove super beneficial for investors who are planning to invest through SIP. Following are the main factors you must take into account before picking the mutual funds:

  • Assess the previous performance of the mutual funds (at least 3-5 years)
  • Consider the CRISIL (Credit Ration Information Services of India Limited) rating to know the current value and performance of the mutual funds
  • Try to pick the funds that are positioned on top of the CRISIL list.
Best SIP Funds to Invest

 

Here we have come up with the 5 most popular SIP investment plans for investors. Read on:

SBI Small Cap Fund

The investment plan where a major portion of your money is invested in the equities and small capital companies is known as SBI small-cap fund. SBI small-cap fund is on the 2nd position on the top-ranking CRISIL investment funds. It is suitable for investors who are ready to bear the moderately high risk and expect a high rate of return.

Mirae Asset Emerging Bluechip

It is a mid-capital investment plan where 35% of your money is invested in equity and the rest in debt securities and other mid-capital stocks. Mirae Asset Emerging Bluechip is suitable for investors with a high-risk appetite.

Reliance Small Cap Fund

Another open-ended investment plan where the majority of your investment is contributed to the equity and equity instruments of small capital organizations. In this plan, your money is invested in debt security and money market (allowing stead earnings to the investors). If you consider the CRISIL listings, then Reliance Small Cap Fund is the best-performing investment plan in the small capital fund category.

L & T Emerging Businesses Fund

In this plan, you invest in equity and equity-oriented securities. This open-ended scheme is especially recommended for investors who are planning to take high risks for better returns over a long period.

UTI transformation and Logistics Fund

Another investment plan where the majority of your funds are invested in equity schemes is UTI Transformation and Logistics Fund. As the name implies, this scheme functions in the logistics and transportation industry and is suitable for investors with a high-risk appetite.

Aditya Birla Sun Life Pure Value Fund

Another equity-based investment plan that aims to provide the investors with a good capital growth option is Aditya Birla Sun Life Pure Value Fund. It is suitable for investors who are searching for a reliable investment option that could generate a decent income over the years.

Debt Fund

 

💫Aditya Birla Sun Life Savings Fund-Growth Regular Plan

This investment scheme is designed for short-term investors who want a steady income. It is suitable for investors will low-risk appetite

💫L&T Low Duration Fund Growth

In this scheme, the major portion of your money is invested in debt securities. L&T Low Duration Fund Growth performs quite well and features medium to low risk. If you want regular returns without having to bear high risk, then this can be a suitable option.

💫Reliance Credit Risk Fund

With moderate risk, Reliance Credit Risk Fund is known for its great returns. This investment scheme specially focuses on money market instruments and debt securities. It is another moderate-risk appetite investment scheme that offers regular income to investors.

💫Aditya Birla Sun Life Short Term Opportunities Fund Regular Plan-Growth

The aim of this investment plan is to generate regular returns with low risks. In this scheme, 100% of the money is invested in debt securities. This plan is suitable for investors who are searching for long-term, moderate-risk investment schemes that offer good rates of return.

💫SBI Magnum Gilt Fund Regular Growth

This scheme invests in government securities. If you want to earn safe and regular investments in the long run, then SBI Magnum Gilt Fund Regular Growth can be an ideal investment option for you.

Balanced Fund

 

🎻L&T Hybrid Equity Fund

This open-ended investment scheme involves equity, money market, and debt investments. It is the most suitable form of investment for investors who want to risk less and expect more. L&T Hybrid Equity Fund involves 75% of investment in equity funds whereas the rest 35% in debt and money market.

🎻SBI Equity Hybrid Fund

It is another combination of equity and debt investments. The major portion of the amount is usually invested in equity whereas the rest in debt to stabilize the risk. This investment plan is recommended for investors who want a regular income and high-capital returns over a long period.

🎻HDFC Balanced Funds

The goal of the HDFC balanced funds is to maximize your capital returns during the maturity period. It is the hybrid investment option where your money is invested in equity and debt.

🎻ICICI Prudential Equity and Debt Fund

As the name implies, your money is invested in both equity and debt instruments. You get to avail of both capital appreciation and steady returns from your investment. It is a balanced investment scheme, which offers a high rate of return while stabilizing the risk.

Equity Fund

 

🔯Mirae Asset Equity Fund Regular Growth

Mirae Asset funds involve the major portion of the investment in equity and equity-related securities. This plan is perfect for investors who are ready to bear high-risk to earn capital appreciation over a long period.

🔯L&T India Value Growth

It is another open-ended scheme where investors get a chance to multiply their investment money by investing in equity. This plan also involves investment in foreign securities. It can be a profitable investment option for high-risk appetite investors.

🔯SBI Magnum Multi-Cap Fund Regular Growth

This equity fund scheme is the best way to ensure the fund's liquidity while getting an opportunity to earn more. In this scheme, your funds are mostly invested in equity and equity-related securities. For those with high-risk appetite, SBI Magnum Multi-Cap Fund Regular Growth can prove a beneficial plan.

🔯Aditya Birla Sun Life Frontline Equity Fund Growth

It is another equity-related funding scheme that involves mid-cap company’s shares. The plan is suitable for investors who want to maximize their investment in the long-term.

🔯ICICI Prudential Blue-chip Fund Growth

This scheme invests in the top companies listed under the National Stock Exchange. It is suitable for investors who want long-term capital appreciation. ICICI Prudential Blue-chip is regarded as the best performing mutual funds in the market.

🔯SBI Blue-chip Fund Regular Growth

In this mutual fund scheme, the major portion of your investment is made in stocks of Blue Chip companies. In this scheme, 70% of your investment is made in equity whereas the rest 30% in debt securities.

Benefits of Investing Through SIP Investment Plan

 

If you are searching for a lucrative and convenient investment plan, then SIP is your pick. Here we've listed the top reasons why you must choose SIP over the lump-sum investment plan.

1) Disciplined Method

If you want your investment to be successful, you need to invest through a disciplined investment approach. From allowing you to adjust the installments according to your preference and financial condition to maintaining the regularity of transactions; SIP can turn out the most profitable investment approach.

2) Leverage the Rupee Cost Averaging

Instead of paying the entire sum in one go, the SIP investment plan allows investors to pay monthly for a long period. This way, you engage in the investment process regularly. The rupee cost averaging feature allows you to pay according to your suitability.

Additionally, you can adjust the installments according to the current market condition. Rupee cost averaging is the best feature for investors who want to earn maximum while taking minimal risks.

3) Flexible, Simple, and Easy-to-track

As discussed above, the SIP investment plan is the flexible and hassle-free approach to investment. All you need to do is fill the bank mandates and SIP investment forms, and that's it! You can even request banks to automate the debit transfers so that the fixed amount will be transferred automatically from your bank account to the mutual fund's account. Tracking your fund's performance was never this easy until the SIP plan emerged.

4) Power of Compounding

Do you know what the best way of making more money out of the investment in mutual funds is? Well, the simple trick to improve your fund’s performance is to start your investments quickly and do it regularly. When you invest the pre-determined amount in mutual funds every month, you can double your investments by the maturity period.

Why Invest in SIP Mutual Funds?

 

There isn't a better way of achieving your financial goals than investing through SIP mutual funds. While lump-sum payment put your money at higher risk, the SIP mutual fund investment plan allows you great flexibility by minimizing the market risk. You can adjust the investments as per the market fluctuations and save yourself from a heavy loss.

Besides, it is the regular form of investment where a specific amount is debited from your bank account and credited to the mutual funds account regularly.

How do Mutual Funds Work?

 

A mutual fund is a popular investment platform where different investors invest money either in equity or debt funds to achieve their financial goals. This money is handled and monitored by professional financial experts. The money is usually invested in bonds, equity, stocks, and other commodities and the investors are promised capital growth.

A mutual fund is a safe, secure, and flexible form of investment option. It is regulated and controlled by the SEBI and Exchange Board of India. However, these funds are subject to market risk. Make sure that you read the terms properly before creating the investment account.

Also Read: What Refers to the Systematic Investment Plan (SIP) in Mutual Funds? Why are they Important?

Also Read: What are Mutual Funds? Types of Mutual Funds, Schemes and Benefits

 

ATTENTION INVESTORS:-

"Prevent Unauthorized Transactions in your Trading / Demat account --> Update your Mobile Numbers / email IDs with your Stock Brokers / Depository Participant. Receive alerts on your Registered Mobile / email IDs for trading account transactions and all debit and other important transactions in your demat account directly from Exchange / CDSL on the same day ......................Issued in the interest of Investors.

 "KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary."

"No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise our bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."