SIPs are a great method to buy mutual funds. It is a great way to invest money to reach your short- and long-term objectives. Starting a SIP is important for the additional benefit that it simultaneously accomplishes the goals of saving and investing. It is quite well-liked by investors. This is due to the fact that it protects against market fluctuations while also promoting financial discipline.
What Is SIP?
The Systematic Investment Plan (SIP) is a type of investment in which the investor selects a mutual fund that appeals to them and invests a certain amount of money in that mutual fund on a regular basis. Instead of investing a large quantity of money all at once, a Systematic Investment Plan makes incremental investments over time.
The Systematic Investment Plan is a clever method of investing that allows an investor to invest anywhere from a small quantity to a huge sum, based on their tastes, requirements, and financial goals.
Mutual funds typically provide SIP, lump sum, or both investment choices. The option to invest in small sums each month through a Systematic Investment Plan is one of the most tempting characteristics of mutual funds (SIP). SIPs in mutual funds offer both diversity and rupee cost averaging.
Consider the scenario where you want to invest 500 per month for five years. You can automate your contributions for the specified term by setting up a SIP with a mutual fund. Additionally, you have the option to give more or less frequently. SIP mutual funds often enable investment on a weekly, monthly, quarterly, semi-annual, or another schedule.
It is also essential to comprehend the SIP meaning in mutual funds since it is not an asset in and of itself, but rather a method of investing in mutual funds. Your SIP payments are invested in a mutual fund scheme of your choosing.
How Does SIP Work?
There are three steps between the beginning of a SIP investment and when the money are invested in a mutual fund scheme:
Choosing A Mutual Fund Scheme
As the initial stage in the SIP investment process, you must choose a mutual fund scheme to invest in.
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Choosing An Investment Frequency
The next stage in your SIP investment journey is to select a comfortable investment frequency. The most popular option, especially among salaried investors, is a monthly frequency, as their salaries are paid regularly. You may choose to invest weekly, quarterly, semi-annually, or yearly unless there are compelling reasons to pick a different frequency.
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Establish SIP With A Mutual Fund Scheme
After selecting a mutual fund, setting up a SIP is a straightforward procedure. On Kuvera, navigate to your preferred mutual fund and click invest. Complete your KYC and submit your bank details together with your SIP contributions and frequency if you are a first-time investor.
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Automatic Deductions And Allocation Of Units Depending On NAV
Once all arrangements have been made, funds will be deducted from your registered bank account. It will be deducted every month on the date you choose when you set up the SIP. This procedure is automated. Your bank account will continue to be debited based on the frequency you choose when setting up the SIP.
Things To Consider Before Investing In SIP
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Determine Your Needs
You can invest in SIPs based on your needs, and you can begin a SIP by depositing a little amount of money each month in a mutual fund. Contrary to investing a large sum, attempting to invest a lesser amount each month reduces the financial impact on your pocket.
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Maintain A Separate SIP For Every Respective Objective
Individuals may have several objectives, and having distinct SIPs for each objective will help you analyse your investment more accurately. Identify the appropriate investment approach for a certain goal and consider investing in the appropriate sector of mutual funds based on your time horizon.
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Diversify Your Investments Based On Your Tolerance For Risk
When investing in a certain asset class, your risk appetite is the amount of risk you are willing to assume. Every investor has a distinct risk tolerance, which is influenced by a variety of criteria, including discretionary income, investing horizon, and other requirements.
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Within A Few Years, Evaluate The Performance Of The Portfolio
Your SIP mutual fund portfolio should be evaluated often. This will enable you to clear your portfolio of underperformers every three to four years, so enhancing its returns.
Best 5 Year SIP Plans for Equity Funds In The FY 22-23
Below are the top performing SIP plans in equities mutual funds based on the last 3 years’ return, together with their fund type, risk level and NAV
Let’s take a closer look at these finest sip plans for 5 years in equities MF:
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Canara Robeco Small Cap Fund Direct Growth
Canara Robeco Small Cap Fund Direct Growth is a Canara Robeco Mutual Fund Equity Mutual Fund Scheme. On December 19, 1987, this scheme was made accessible to investors.
Canara Robeco Small Cap Fund Direct Growth fund is currently managed by Cheenu Gupta.
The fund presently has an AUM of 47,886 Cr, and the latest NAV as of November 21, 2022 is 26.16.
The Canara Robeco Small Cap Fund Direct Growth has a risk rating of very high. The minimum SIP investment is Rs.1,000. Lumpsum requires a minimum investment of Rs.5,000. If redeemed within one year, the exit load is 1%.
| Fund Name | Category | Fund Size (in Cr) | 1Y Returns | 3Y Returns | 5Y Returns |
| Canara Robeco Small Cap Fund Direct Growth | Equity | 4,063.25 | 9.5% | 39.96% | NA |
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PGIM India Midcap Opportunities Fund Direct Growth
PGIM India Midcap Opportunities Fund Direct Growth is a PGIM India Mutual Fund Equity Mutual Fund Scheme. On May 13, 2010, this scheme was made accessible to investors. The current fund manager of the PGIM India Midcap Opportunities Fund Direct Growth fund is Kumaresh Ramakrishnan, Avinash Agarwal. The fund presently has an AUM of 16,371 Cr, and the latest NAV as of November 21, 2022 is Rs.49.60. The PGIM India Midcap Opportunities Fund Direct Growth has a risk rating of Very High. The minimum SIP investment is Rs.1,000. Lumpsum requires a minimum investment of Rs.5,000. 0.5% if redeemed within 90 days.
| Fund Name | Category | Fund Size (in Cr) | 1Y Returns | 3Y Returns | 5Y Returns |
| PGIM India Midcap Opportunities Fund Direct Growth | Equity | 7,257.41 | 1.8% | 38.1% | 19.4% |
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Nippon India Small Cap Fund Direct Growth
Nippon India Small Cap Fund Direct Growth is a Nippon India Mutual Fund Equity Mutual Fund Scheme. On June 30, 1995, this scheme was made accessible to investors. The current fund manager of the Nippon India Small Cap Fund Direct Growth fund is Samir Rachh, Dhrumil Shah.
The fund presently has Rs.2,77,915 Cr in assets under management (AUM), and the latest NAV as of November 21, 2022 is Rs.101.33. The Nippon India Small Cap Fund Direct Growth has a risk rating of Very High. The minimum SIP investment is Rs.100. Lumpsum requires a minimum investment of Rs.5,000. If redeemed within one month, the exit load is 1%.
| Fund Name | Category | Fund Size (in Cr) | 1Y Returns | 3Y Returns | 5Y Returns |
| Nippon India Small Cap Fund Direct Growth | Equity | 22,844.44 | 10.3% | 35.2% | 17.5% |
Best 5 Year SIP Plans for Debt Funds In The FY 22-23
Below are the top SIP plans for 5 years in debt mutual funds based on the last 3 years’ return, together with their fund type, risk level and NAV
Let’s take a closer look at these finest sip plans for 5 years in debt MF:
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JM Low Duration Fund Direct Plan Growth
JM Financial Mutual Fund’s JM Low Duration Fund Direct Plan Growth is a Debt Mutual Fund Scheme. On September 15, 1994, this scheme was made accessible to investors. JM Low Duration Fund Direct Plan Growth fund is currently managed by Vikas Agarwal. The fund presently has Rs.1,918 Cr. in assets under management (AUM), and the latest NAV as of November 21, 2022 is Rs.31.45. The JM Low Duration Fund Direct Plan Growth has a risk rating of Low to Moderate. The minimum SIP investment is Rs.500. Lumpsum requires a minimum investment of Rs.5,000.
| Fund Name | Category | Fund Size (in Cr) | 1Y Returns | 3Y Returns | 5Y Returns |
| JM Low Duration Fund Direct Plan Growth | Debt | 143.21 | 4.25% | 11.08% | 5.25% |
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HDFC Fixed Maturity Plan 1141 Days August 2018 (1) Direct Growth
HDFC Fixed Maturity Plan 1141 Days August 2018 (1) Direct Growth is a Debt Mutual Fund Scheme launched by HDFC Mutual Fund. On December 10, 1999, this scheme was made accessible to investors. HDFC Fixed Maturity Plan 1141 Days August 2018 (1) Direct Growth fund is being managed by null. The fund presently has Rs.4,39,939 Cr in assets under management (AUM), and the latest NAV as of September 27, 2021 is Rs.13.06. The risk of the HDFC Fixed Maturity Plan 1141 Days August 2018 (1) Direct Growth is moderately high.
| Fund Name | Category | Fund Size (in Cr) | 1Y Returns | 3Y Returns | 5Y Returns |
| HDFC Fixed Maturity Plan 1141 Days August 2018 (1) Direct Growth | Debt | 276.96 | 9.19% | 9.52% | NA |
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Bank of India Short Term Income Fund Direct Growth
BOI AXA Mutual Fund’s Bank of India Short Term Income Fund Direct Growth is a Debt Mutual Fund Scheme. On March 31, 2008, this scheme was made accessible to investors. Piyush Baranwal currently manages the Bank of India Short Term Income Fund Direct Growth fund. The fund presently has Rs.2,798 million in assets under management (AUM), and the latest NAV as of November 21, 2022 is Rs.23.70. The Bank of India Short Term Income Fund Direct Growth has a risk rating of Moderate. The minimum SIP investment is Rs.1,000. Lumpsum requires a minimum investment of Rs.5,000.
| Fund Name | Category | Fund Size (in Cr) | 1Y Returns | 3Y Returns | 5Y Returns |
| Bank of India Short Term Income Fund Direct Growth | Debt | 43.56 | 26.70% | 9.45% | 3.94% |
Best 5 Year SIP Plans for Hybrid Funds In The FY 22-23
Below are the top SIP plans for 5 years in hybrid mutual funds based on the last 3 years’ return, together with their fund type, risk level and NAV
Let’s take a closer look at these finest sip plans for 5 years in hybrid MF:
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Quant Absolute Fund Direct Growth
Quant Absolute Fund Direct Growth is a Quant Mutual Fund Hybrid Mutual Fund Scheme. On April 15, 1996, this scheme was made accessible to investors. Quant Absolute Fund Direct Growth fund is now managed by Sanjeev Sharma and Pushpa Rai. The fund presently has an AUM of Rs.6,179 Cr and the latest NAV as of November 21, 2022 is Rs.326.54. The Quant Absolute Fund Direct Growth has a risk rating of Very High. The minimum SIP investment is Rs.1,000. Lumpsum requires a minimum investment of Rs.5,000.
| Fund Name | Category | Fund Size (in Cr) | 1Y Returns | 3Y Returns | 5Y Returns |
| Quant Absolute Fund Direct Growth | Hybrid | 761.95 | 13.63% | 30.55% | 19.97% |
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Quant Multi Asset Fund Direct Growth
Quant Multi Asset Fund Direct Growth is a Quant Mutual Fund Hybrid Mutual Fund Scheme. On April 15, 1996, this scheme was made accessible to investors. Current Fund Manager of Quant Multi Asset Fund Direct Growth is Pushpa Rai. The fund presently has Rs.6,179 million in assets under management (AUM), and the latest NAV as of November 21, 2022 is Rs.89.42.
The Quant Multi Asset Fund Direct Growth has a risk rating of Very High. The minimum SIP investment is Rs.1,000. Lumpsum requires a minimum investment of Rs.5,000.
| Fund Name | Category | Fund Size (in Cr) | 1Y Returns | 3Y Returns | 5Y Returns |
| Quant Multi Asset Fund Direct Growth | Hybrid | 428.46 | 12.95% | 30.12% | 20.70% |
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Bank of India Mid & Small Cap Equity & Debt Fund Direct Growth
BOI AXA Mutual Fund introduced the Bank of India Mid & Small Cap Equity & Debt Fund Direct Growth, a Hybrid Mutual Fund Scheme. On March 31, 2008, this scheme was made accessible to investors.
Bank of India Mid & Small Cap Equity & Debt Fund Direct Growth fund is currently managed by Alok Singh and Ajay Khandelwal. The fund presently has Rs.2,798 million in assets under management (AUM), and the latest NAV as of November 21, 2022 is Rs.24.21.
Bank of India Mid & Small Cap Equity & Debt Fund Direct Growth has a risk rating of Very High. The minimum SIP investment is Rs.1,000. Lumpsum requires a minimum investment of Rs.5,000. If redeemed within one year, an exit load of 1% applies to units representing more than 10% of the investment.
| Fund Name | Category | Fund Size (in Cr) | 1Y Returns | 3Y Returns | 5Y Returns |
| Bank of India Mid & Small Cap Equity & Debt Fund Direct Growth | Hybrid | 385.52 | -1.05% | 25.20% | 11.78% |
SIP – FAQs
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Can I Withdraw My SIP At Any Time?
You can opt to redeem your SIP to meet immediate requirements or to achieve the financial objective for which you invested in the first place. You can also remove a SIP if you believe your investment is not profitable and have opted on a more lucrative scheme.
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Is SIP Better Than FD?
Systematic Investment Plan (SIP), unlike FD, is not an investment product. It is a way of investing in mutual fund schemes in a systematic manner. Bank FDs now provide guaranteed returns, but they barely outperform inflation, especially when post-tax returns are considered. Mutual Fund SIPs, on the other hand, may readily outperform inflation.
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Is SIP Free Of Risk?
No. You are effectively investing in mutual fund schemes through SIPs. Consequently, the volatility of the market may affect your investments. In fact, you can see negative returns on your SIPs if the market experiences a sharp decline. The good news is that historically, if someone has invested in diverse stock funds for more than 10 years, SIPs have never produced negative returns.
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What Is SIP in OTM?
Your SIP investment is automated through a banking procedure called a one-time mandate (OTM). Your banker will invest in the mutual fund scheme of your choosing at the predetermined dates after receiving an OTM form from you and crediting a specified amount at regular intervals. By choosing a one time mandate in SIP, you may invest automatically, streamlining the entire procedure.
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