A mastery to hand-pick the Best SIP plans can profoundly enrich your monthly investment strategy. Choose from the top SIP plans and relish the gains in long term.
Systematic Investment Plan (SIP) allows investors to create surplus wealth through the periodic investment of a small amount. To ensure the consistent and remunerative growth of the investment, choosing the best SIP plans is of utmost importance. From a plethora of SIP plans in India, only a few qualify to be in the list of top mutual funds for SIP.
SIP or Systematic Investment Plan is a mode of investment in mutual funds in which a fixed amount is invested in the selected scheme periodically. The amount that needs to be invested periodicity can be chosen by the investor. The units are bought on the basis of prevailing NAV at the time of each investment. SIP investments allow investors to accumulate huge capital in a long term conveniently and effortlessly.
While assessing the best SIP plans for oneself, investors must be certain of the goals and objectives of the scheme. Apart from that, there are various other factors which must be entertained while choosing the mutual fund for SIP.
SIP plans invest a fixed amount at regular intervals. Hence, a fund which has been consistently performing well in different market conditions will be a better choice to build long term wealth. The performance of the fund in last 3, 5, or 10 years might give an idea of how consistent a mutual fund is.
B. Internal and External VolatilityWhile choosing the best SIP plan, it is essential to check the volatility of the scheme. The volatility in a mutual fund can occur either due to fluctuations of the stocks in the portfolio, which is also called internal volatility, or due to the benchmark returns, which is referred to as external volatility. Internal volatility can be checked by Standard Deviation while Beta can estimate the external volatility.
C. Risk-Adjusted Return Equity mutual funds are subject to market risk and are considered risky but the best SIP plans in India offer reasonable returns when they incur higher risk. The risk to reward ratio can be checked for every scheme by analysing the Sharpe and Sortino ratios.
D. Fund Manager
The fund manager operates the steering wheel of a mutual fund. The decisions and stock selection strategy of a fund manager can highly influence the outcome of a fund. While choosing the best investment plan with high returns, investors must consider investment style and past track record of the manager along with the performance of other schemes under his management.
E. Portfolio Quality
The composition and quality of the stocks in the portfolio of the fund can be checked to select the foremost fund for your SIP investment. The sales, profit, P/E & P/B ratios, and various other aspects of the stocks in the portfolio can be checked to select the best investment plans in India.
F. Size of the Fund
If the AUM of a mutual fund is low, the investments can be risky. If an investor with significant holdings decides to redeem, the small scale investors have to suffer. However, if the AUM is very high in an equity scheme, it can affect the performance negatively. The effect of the size of a fund has a different impact on equity and debt scheme. Higher AUM in a debt scheme is better as the expenses can be distributed over a number of investors which results in lower expense ratio and higher returns.
Choosing the best SIP plan for oneself is not an easy task and requires significant time and effort. To ease out the selection and to reduce the time and effort of the investors, our research team has prepared a list of schemes which outshine the peers in their respective category. These schemes have been selected after hours of thorough research on multiple parameters of hundreds of schemes. The past, as well as the future aspects of these funds, have been considered while making the list of top SIP plans to invest. The list is renewed and updated regularly depending on the prevailing performance of scheme with respect to the market conditions.
Considering all the above factors, there are various schemes which can be included in the list of top mutual funds for SIP. However, it is not obligate that a fund that excels all the criteria of being the best SIP plan is suitable for every investor. A top performing debt scheme won’t benefit a long-term investor while the best ranked small-cap fund can be a nightmare for short term investors. Any particular scheme that is most suitable for one investor, may or may not be good for others which is the reason it is important to check the suitability of the scheme for oneself. Investors must select a scheme that serves their investment objective while taking the following aspects into consideration.
A mutual fund must be chosen according to the risk appetite of the investor. High-risk schemes can be hazardous for conservative investors while a low-risk fund might not achieve the financial goals of aggressive investors.
Investing in mutual funds without fixing a goal is pointless. The financial goals of the investors and the objective of the fund must be in line for a delightful investment experience in mutual funds.
The investments in a mutual fund must be kept for enough time that is required by the fund. Suitable tenure to invest in small-cap funds is 7-10 years while that for a debt scheme is 3 months. If a scheme is not chosen according to the tenure of investment, the goal won’t be reached. It must be noted that the SIP period and the holding period doesn’t need to be the same. Investments can be accumulated even after the completion of the SIP period for a better result.
Expense ratio and exit load must be considered while selecting best SIP plans but this should not be the only factor. Generally, high expense ratio downgrades returns, but a fund with a higher expense ratio can enter the list of top SIP plans if it is providing enough returns.
Mutual funds are an opportunity to multiply the funds manifold in a long term, but if an opportunity meets preparation, the results can be overwhelming. Equity mutual funds depend on the stock market and do possess risk but necessary precautions and proper knowledge can reduce that risk to a significant extent. If an investor makes an informed decision regarding the selection of mutual funds for SIP, there are fewer chances of loss and more chances to prosper.
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