Systematic Investment Plan also known as SIP investment is a fragmented investment offered by ‘mutual funds’ to the investor. It grants the investor to invest in small fraction of amount instead of bulk depository amount. The number of times the investments occur may be weekly, monthly or quarterly.
A certain amount is deposited by the investors in their accounts sporadically. These amounts will be invested in mutual funds. The investor is provided with a certain number of units as per the net set value (NSV). Every time a certain amount is invested, the units are multiplied to the investor’s bank account.
SIP investment is proven to be discipline, flexible and systematic. The investors may choose to stop investing at any point of time. They are also free to increase and decrease their periodic payable amount. SIP can be sought by those investors who do not have active financial resources.
Planning for an SIP Investment Is Easy and Approachable
Resource allocation is the amount one would invest monthly on a specific investment of mutual funds. A common resource allocation would be 50% large-cap funds, 30% small-cap funds and remaining amount is in debt funds.
Number of Schemes
One may have at least 3 schemes in their portfolio. On the other hand, one may not acquire more than 78 schemes. In case it exceeds 78 schemes the portfolio of the investor becomes complex and laborious to manage and track. Retaining 5 schemes would be an ideal number. One debt scheme and four equity schemes.
Mutual Fund Schemes
A good research for the best mutual funds can be an ideal way for curating SIP investment plan and building up wealth. This is the final step to planning an SIP investment.
The Best SIP Equity Mutual Funds to Invest
To understand how to allot funds for investing in equities, it is vital to understand the return, expectation and the risk in the investments. On studying how to allot funds, it becomes clear where to allocate the amount in differing categories of funds. SIP investment is based on the type of funds one chooses to invest on. It may be a large-cap fund, small-cap fund, multi-cap fund, mid-cap fund or balanced fund.
Large-cap funds are generally companies that acquire strong market and are usually ratified as safe for investors. A vital fact about large-cap funds are that they are always ready with information regarding differing categories of companies, magazines and newspapers. These large-cap fund companies maintain transparency providing proper information to their investors. Wipro, Infosys and TCS (Tata Consultancy Solutions) are categories as large-cap fund companies.
Mid-Cap Funds are wedged between large-cap and small-cap funds. Mid-cap funds are found in medium sized companies that may have more risk related factors than a large-cap fund company. They are placed in between the two extremes funds in every parameter whether it is based on size, employee and cliental. Investing on mid-cap funds may generally bring about high returns with 3 or 5 years. An interesting fact, an investor in a mid-cap fund could harness higher return than a large-cap fund, which brings about a moderate return yet a safer one.
A mid-cap fund investor may generally be one of those companies with success stories.
Also Read: 5 Sign you Should Invest in Mutual Fund
Small- cap funds usually come in smaller gratuity and have smaller client base. Small-cap funds are great for start-up companies and for beginners. Small-cap funds are potential of huge returns and may show growth in huge numbers once applied in the capital market. But one should go through a proper investigation before appliance to avoid any kind problems. Research should be specifically focused on credentials, track record, management strength, long-term and short-term plans of the said company before investing in it.
Small-cap funds may provide huge returns in a short period of time. Sometimes, small-cap funds may prove to be a good long-term investment if it is wisely managed and administered. Being in the lowest place in the capital market, small-cap funds are often misconceived as hazardous. This view is however not quite true.
The other two SIP investment funds are Multi-cap fund and Balanced fund. These two funds subsist between the other three funds.
Best SIP Equity Mutual Funds to Invest in 2022
|Fund Type||Names Of Funds|
|Large-Cap Funds||Franklin India Bluechip Fund|
|S&P BSE Sensex|
|ICICI Pru. Focussed Bluechip Fund|
|Multi-Cap Fund||Franklin India Prima Plus Fund|
|ICICI Pru. Value Discovery Fund|
|S&P BSE 500|
|Mid-Cap Fund||HDFC Mid Cap Opp Fund|
|CNX Free Float Midcap 100|
|Franklin India Prima Fund|
|Small-Cap Fund||DSPBR Micro Cap Fund|
|S&P BSE Small Cap Fund|
|Franklin India Smaller Company Fund|
|Nifty Free Float Midcap 100|
|Balanced Fund||HDFC Balanced Fund|
|Value Research Balance|
|ICICI Pru. Balanced Fund|
|Value Research Balanced|