best-sip-plans

What is SIP in Mutual Fund

SIP full form is Systematic Investment Plan; it is a financial planning tool that helps the investor to create wealth by simply investing the small amount of money every month/quarterly, over a span of time. Precisely, sip investment is a disciplined way of investing in mutual funds.

Best SIP Plans to Invest in Mutual Fund

 

SBI Small Cap Fund (G) Direct Plan

Mutual Fund 5 Star

Returns 5Y:  28.83%

Mirae Asset Emerging Bluechip

Mutual Fund 5 Star

Return 5Y: 26.24%

Canara Robeco Emerging Equities

Mutual Fund 5 Star

Return 5Y: 25.92%

Reliance Small Cap Fund (G) - Direct

Return 5Y:  25.87%

ICICI Pru Banking & Fin Serv Fund

Return 5Y: 24.01

  • Past Performance Is No Guarantee of Future Results

Best SIP Plans to Invest are Following But Before That Let’s Figure Out The Features of SIP Plans.

 

  • SIP is done by the individuals to build in their wealth, save for their future without any hassle. You can start with as low as INR 500.

  • SIP is amazing as there is no lock-in-period as compared to bonds, PPF, or FD. An investor can stop her sip investment accordingly without any penalty.

  • There is no such limit on the number of SIP; you can start with as many as you like to invest, hence, multiple sip plans.

  • Better are the chances if you are an early bird for investing in sip; the wealth creation turns out to be good. Better to start at an age of 20-30 years rather than waiting for 40 old.

  • An investment in SIP is done in the case of equity markets only, regardless, if you make an investment in a financial institution or bank, then it won’t be a sip.

Benefits of SIP Investment

Following are the benefits that are considered:

  1. Become Regular and Disciplined Investor: A SIP allows anyone to become a regular investor. Since one saves regularly, it helps them cutting unnecessary expense. Thus, allowing them to become a disciplined investor.
  2. Large Funds are not required:  SIP removes the risk of having a large fund required. One can enter the market by simply investing with a minimum amount of Rs. 500 per month.
  3. Rupee cost averaging:  This is one of the most vital parts of SIP investing. A SIP investment allows you to take advantage of rupee cost averaging. Let’s understand the concept. NAV prices fluctuate daily. So, better to make a bulk investment, one should invest regularly.
  4. Hassle Free: Investment is SIP is quiet, easy compared to other money market instrument. Apart from that, it allows an investor to increase or decrease the amount of money they have.

How to Start SIP Investment

 

The early investor always faces the common issue ‘how to invest in sip’? There are numerous ways to investing, all you need to do is follow these procedures:

  • Get Your KYC done:

To make an investment in mutual funds, make sure you have certain details such as Pan card, Date of birth, Address proof, a cheque book, and passport size photograph. Make sure to provide either of the soft copy document of driving license, bank statement and a utility bill to verify your address to the website address.

  • Start your SIP Online:

Once the KYC is done, then you can either directly go to the portal of the particular fund house or register with a mutual fund distributor. Then click on the register button or new investor link. Proceeding further, fill-in the basic details and create your username and password. Again, jot down and re-login to confirm the registration process.

  • Select the right SIP

What is the right SIP for your needs? This will depend on your income, your financial goals, and the amount you are willing to invest.

 

How much should you invest?

Experts often suggest linking a SIP with a financial goal (e.g. buying a car, paying for a vacation, building a retirement corpus). Use a mutual fund SIP calculator to see how much you need to save on a monthly/quarterly basis to achieve that goal.

When should you invest it?

Set a date according to your free-hand on which to debit the SIP amount.

How To Invest in Best SIP Plans with Gulaq

Investment in SIP with Gulaq is not a tedious process. All you need to do is figure out if your KYC compliant or not, if not, we have a simple process to deal with. And if your KYC is good to go, look at some of the sip plans according to the returns, goals, risks, horizons, and select the amount you are willing to start with. Tap on the start and the investment is done. That simple!

How Does Mutual Fund SIP Work

When an investor invests in mutual funds, then he can do it in two ways i.e. a lump sum amount or SIP. SIP provides the discipline approach to investing. It allows an investor to invest an amount, on a particular date (monthly or quarterly basis) for a fixed period of time. Since, the whole handling of money through SIP investment is done by money market experts or fund manager, but it’s better to know how SIP really works. There are two key mechanism behind the working of SIP.

Compounding Effect or Effect of compounding:

The effect of compounding holds a lot of value, especially in the investing domain. Compared to simple interest, the return investor earns from compounding grow at a geometric rate instead of arithmetic rate. It leads to an exponential growth of money. The value of SIP investment increases as investing time period increases. Let’s try to understand it through an example.

 

SIP Investment (RS)

 

SIP Investment Tenure

 

Rate of Interest

 

Returns (at the end of tenure)

 

Total Output (RS)

 

 

Simple Interest

 

500 10 12% 600 1100
Compound Interest 500 10 12% 1150 1650

 

As it can be seen there is substantial rise in the output, when the interest is calculated on a compounding basis.

Rupee Cost Averaging:

Rupee cost averaging gives an extra edge to the investor. It helps them buying more units when the market is less and less when the market is high. Let’s try to understand through an example. Suppose an investor A invests RS. 60,000 in a fund for a NAV value of Rs 150. The total number of units will be 400. Whereas an investor B invest RS 10,000 in following funds at successive NAV value Rs. 150, 120, 100,120,150, 100. We get the average cost per unit as 12.42 units/RS. Whereas in the case of the investor A, the average cost per unit is Rs 15/units. This will give an extra edge to the investor B in the long run, as he will be less affected by the market ups and down. That’s the reason SIP plans are an attractive investment.

How SIP Calculator Works?

A mutual fund SIP calculator helps an investor to estimate their returns on their investment only on a few parameters. The calculator works on XIRR formula. An investor needs to put the respective value in the calculator.

{{ Formula Image here}}

* di = the ith, or last, payment date.

* d1 = the 0th payment date.

* Pi = the ith, or last, payment.

Or, they can also use the XIRR (a function in an excel). It doesn’t require to put the Nav date on the excel sheet. Let’s take an example to better understand. Suppose an investor invest RS. 50,000 per month with a tenure of 12 months at an expected return 14%. Then, the future value will be 6,47,504. To do so in excel sheet you

FUTURE VALUE  
SIP AMOUNT 50000
TENURE 12 months
EXPECTED RETURN 14%
Future Value 6,47,504

 

  • First open the excel sheet.
  • To further create a table on the left-hand side as per given schedule.
  • Write down the value as per given data above.
  • At the end, use the future value formula on the right side of FV(B8/12, B7,-B6,0,1)
  • Press the enter tab.
  • The real value of the investment will be shown.

What are The Key Points To Be Considered While Investing Through SIP?

 

There are certain key point taken into consideration while investing through SIP.

  • Purpose of the SIP.

An investor needs to identify the purpose of their investment. Because it gives, direction to their investment. It allows a small investor to make a specific goal about how much need to be saved in order to make the investment.

  • Tenure of the SIP.

Tenure of the SIP is one of the most key things to be taken into consideration. The longer the period of the SIP tenure, the greater will be compounding effect on the returns of their investment.

  • Risk profiling, according to Asset Allocation.

Striking the right balance between your risk and investment allocation is the key to be a good investor. Hence, it is quite essential to strike a balance with your equity, debt and hybrid funds, while evaluating your SIP strategy. A smart investor portfolio should contain a balanced proportion of large caps and mid-caps.

Frequently Asked Questions

 

best sip plans to invest for 5 years.

best sip plans to invest for 5 years.

Start SIP Today & Grow Your Money

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Attention Investor
Investments in Mutual fund & Securities Market are subject to market risks. Please read the scheme information and other related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund or designing a portfolio that suits your needs. Terms and conditions of the website are applicable.

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Mutual fund investments are subject to market risks, read all scheme documents carefully.

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