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Best SIP Funds is a list of hand-picked Mutual Fund Schemes that have given better SIP returns compared to other Funds in same category. This means these Funds stick to their investment philosophy in difficult times & aren't afraid of temporary correction in the prices of the Stocks in their Portfolios & hence generate better returns over long term for their SIP investors.
A Systematic Investment Plan (SIP), more popularly known as SIP, is a convenient method to invest in mutual funds. Using SIP, you can invest a fixed amount - as small as Rs. 100 in a Mutual Fund scheme at regular intervals. In fact, you can take a call on how regularly you want to invest - it can be weekly, monthly, quarterly, or even annual.
To understand what is SIP more easily, you can compare it to EMI or Equal Monthly Installments that you pay on a loan. You take an EMI route because you cannot make a payment for a purchase at one go. So, you split that amount into monthly payments and pay off the amount. Similarly, SIP is a monthly route to invest.
The major difference between SIP and EMI is of course the fact that you have to pay an interest amount for the loan; whereas, through SIP, you are investing and earning returns.
A SIP is a very simple and flexible way of investing. In a SIP, a fixed amount of money is debited from your savings or current bank on a monthly or a quarterly basis & invested in your chosen mutual fund scheme. Then a certain number of units of that particular mutual fund is allocated to you, based on the purchase price (or Net Asset Value, NAV) of the fund on that particular date.
The most important benefits of investing through the SIP route are:
SIPs are no doubt the best way to invest in Mutual Funds , but before making your first investment knowing the tax implication is also important. However, the tax implications of different types of mutual fund schemes are different.
Although all gains from Mutual Fund investments are classified as Capital Gains, the sub-classification into Short-Term Capital Gains and Long-Term Capital Gains is based on the kind of fund and the duration of investment.
If equity fund units are held for a tenure of more than 12 months, the gains generated are treated as Long Term Capital Gain (LTCG) for taxation. If the period of holding is less than 12 months, the gains are treated as Short-Term Capital Gains.
For debt funds, the units need to be held for a tenure of more than 36 months to qualify for LTCG taxation. Else the units qualify for Short Term Capital Gain (STCG) taxation.
If you want to start a SIP in any mutual fund scheme, you can do so via ET Money's online portal or app in 4 easy steps:Explore now
Install and open the ET Money app on your mobile or login on ET Money website
Click on the "Find Funds" option to select the SIP fund you wish to invest in. Or you can directly search for it on the search bar at the top.
Select mode of investment as SIP and enter the installment amount, date and duration of the SIP.
Enter your bank details to set up bank mandate and automate payments using EasyPay.
After this, the amount of your SIP investment will be auto-debited from your account on the date of investment.
For an investment horizon of up to 3 years, investors should only do a SIP in Debt Funds. Ultra Short Duration Funds can be a good alternative for a 1-year SIP.
Yes, you can stop your SIP anytime and withdraw the invested amount - either in part or all of it. The only exception is tax saving funds like ELSS which comes with a lock-in period of three years from the date of investment. In ELSS, you will be able to withdraw your invested amount only after three years from the date of investment.
By investing through SIP, you spread your investments over a period of time and avoid the risk of investing all your money at a time when the market is at its all-time high. You can invest a lump sum amount when there is a steep correction in the market like the one in March 2020. So, start a SIP and whenever you see a sharp correction, top it up with lump-sum investment.
When you cancel your mutual fund SIPs, the amount will stop getting debited from your bank account. The Mutual Fund company will not charge any penalty if you stop the SIP. The amount you have already invested will still remain invested in the fund and will continue to generate returns. You can withdraw the invested money - either in part or all of it - at any time.
One of the biggest mistakes in investing is to try and predict the highs and lows of the market. What you think as a market high can just be the beginning of a big rally. This is why it is always a good time to start your SIP. By investing through SIP, you spread your investments over a period of time and average out the ups and downs in the market.
An investor can start a SIP in ELSS Funds. These funds help you save taxes as you can claim the investment amount as a tax deduction under Section 80C.
If tax saving is not the priority, then Flexi Cap Funds can be considered. These funds also invest in companies of all sizes and across sectors. So you get a diversified portfolio which helps to keep risk in check.
Yes, definitely. Investing through SIP makes you a disciplined investor, as you invest on a regular basis. Because of this disciplined approach, you are better placed to deal with market volatility. You get more units for the same investment amount when the markets go down. This helps bring down your average cost and when markets rebound you get higher returns due to this lower cost.
SIP is a mode of investing in mutual funds and not an investment tool in itself. So you can start SIP in any of the mutual fund schemes that you want to invest in and the returns will depend on the performance of that mutual fund scheme.
You can invest in SIPs as long as you want. There is no upper limit on it. Ideally, you should start a SIP with a goal in mind. Set a target amount that you would require to fulfill that goal and continue the SIP till you reach that target.