best sip plans to invest in 2020

Best SIP Plans 2020- Top Sip Mutual Funds to invest in India

Investment Sip

If you are thinking to invest in SIP plans, then you need to find out which are the best SIP plans currently available in 2020. You require all the detailed information about Sip Investment plans so that you can invest intelligently and receive good benefits from it in the future. Investment should always be done very carefully to avoid unwanted circumstances later. But before going into details, here we should know about the SIP first. So, without wasting any time, let’s get started.

What is SIP?

SIP stands for Systematic Investment Plan wherein you need to invest a fixed amount of money (premium) periodically in Mutual funds of your choice. The premium will be deducted from your Savings Account every month (mostly) and then it will be deposited in your mutual fund scheme.

One can invest regularly in his/her preferred mutual fund schemes. The difference between other investment plans and SIP is that while in other plans you need to deposit the entire amount in one go, in SIP a fixed amount of money is deducted from one’s savings account every month and it is transferred to the mutual fund in which the person chooses to invest.

5 Best SIP Plans in India 2020

Here is a list of best sip plans for 5 years and 3 years with their last 3 years and 5 years returns, expense ration and exit load value.

Sl. No.Fund name3 yr returns (%)5 yr returns (%)NAVAUMExpense RatioExit Load
1Axis Bluechip Fund Monthly SIP Plan10.01%9.88%INR 33.15INR 14,522 Cr.0.43%1%
2SBI BlueChip Fund-Regular (Growth)1.61%6.12%INR 40.45INR 20,783 Cr.1.03%1%
3BNP Paribas Mid Cap Fund (Growth)0.26%5.09%INR 35.4INR 665 Cr.0.89%1%
4Mirae Asset India Opportunities Fund – Regular (Growth)4.59%8.91%INR 53.69INR 16,381 Cr.0.62%1%
5Franklin India Prima Plus Fund (Growth)-1.99%2.91%INR 531.27INR 8,364 Cr.--

1. Axis BlueChip Fund

Axis Bluechip Fund is an open-ended fund that has been consistent in outperforming its benchmark. This is the best option for investors who wish for long-term capital appreciation. This fund mainly invests in large-cap stocks of big companies. It has a track of delivering high returns. For instance, if you invest INR 6 lakhs as SIP of INR 10,000 every month for 5 years, then you will receive INR 7.24 lakhs hopefully after 5 years.

2. SBI Bluechip Fund

SBI Bluechip is an equity mutual fund and it invests mostly in equity-linked instruments. This in turn will help the investors to meet their long-term financial goals. Its fund house manager is Ms. Sohini Adani. This is one of the best SIP plans if you wish to invest for 5 years.

3. BNP Paribas

The BNP Paribas MidCap fund aims to generate long-term corpus growth by investing in those companies that have high growth potential in the mid-capitalization segment. This fund also invests in companies that are driven by a dynamic management style.

4. Mirae Asset India Opportunities Fund

The Mirae fund house was launched back in April 2008. You wouldn’t have to pay an exit load if you stay invested for more than 1 year. This fund’s investment is diversified as 71.54% in large-cap stocks, 13.15% in midcap, and 3.62% in small-cap stocks.

5. Franklin India Prima Plus Fund (Growth)

Franklin India Prima Plus Fund is one of the oldest funds with a track record of 20 years. It has delivered high returns consistently throughout its existence. Also, it is pretty good at delivering appreciable returns even when the market has fallen.

Disclaimer: Mutual Funds are subject to market risk. Their interest rates could change anytime so choose accordingly. The given list is just a recommendation from our side.

After knowing which the best SIP plans for 5 years and 3 years are, to invest in 2020, you must be thinking about how to choose the best one among these plans. So, here is the solution for you. The following are the steps to judge which the best SIP plans are, suits your requirements.

How to choose the best SIP plan for SIP investment?

In this online era, you can get every information on the internet. So, you can check out the features of various mutual funds online and compare them too. There are certain points you must keep in mind while going through the SIP mutual funds.

1. SIP tenure

It is recommended that you keep a reference period of 5 years and then check how a fund has performed in the market. Also, check out the risk, returns, and tax benefits offered in various durations of the SIP.

2. Fund House

You must check out the reputation and past performance of a fund house before finalizing a plan. This will give you an idea of whether the fund house handles the market fluctuations properly or not. This point is extremely important as some fund houses can’t bear the market lows and then you might incur a massive loss.

3. AUM (Asset under Management)

You can consider the INR 500Cr AUM as a good benchmark. Funds having this mark and those that are above this mark can be considered to be appropriate while deciding a SIP fund. But, this is not a thumb rule. The assets below this mark might not be bad. However, there is a chance that those below this mark might not perform as well as the funds above this asset mark.

How does SIP work?

SIP instils the practice of regular savings in a person. After you purchase a plan, then the premium amount of the plan will be automatically deducted from your bank account every month. This will continue for the entire tenure of your mutual fund.

Based on the NAV of your mutual fund, the units will be allocated to you. Additional units will be added as well based on the market rate of your mutual fund. So, with each investment, the reinvested amount becomes larger and hence, the return on it increases too.

You don’t need to be a stock market expert to invest in SIP Plans. The units will be purchased at separate rates and more units shall be bought when the market is low and vice versa.

Also, you will have the entitlement to choose when to receive the investment returns: periodically or at the end of the SIP.

For example, if you invest INR 1 lakh in a mutual fund, then you can invest a lump sum or via SIP. If you choose the SIP option, then you will have to decide a premium amount, suppose INR 500. Now, INR 500 will be deducted from your account on a fixed date of every month and this amount will be credited towards your mutual fund. This premium deduction will continue until the end of your investment tenure.

Types of SIP

SIP has gained immense popularity because of its financial discipline, safety, and security, convenience. There are generally four kinds of SIP available in India.

Given below are the types of Systematic Investment Plans (SIPs):

1. Top-up SIP

A top-up SIP is a type of SIP that will allow you to increase your investment in a periodic manner. You will have the flexibility to invest a higher amount later if you want to. This way you will be able to make the most out of your investments as you have the freedom to invest in the best performing funds regularly.

2. Flexible SIP

Flexible SIP is a type of SIP wherein you will have the flexibility to invest whichever amount you feel like. This means that you can increase the amount of investment if your cash flow increases and also decrease it if the cash flow decreases.

3. Perpetual SIP

Perpetual SIP plan is a type of SIP that allows you to alter the end date of your investment. You can carry on your SIP without having an end date. Generally, SIPs have an end date of 1 yr, 3 yrs, or 5 yrs. With a Perpetual SIP, you will have the freedom to withdraw your invested amount whenever you want to as per your financial needs.

4. Trigger SIP

Trigger SIP is a type of SIP that allows you to set the NAV, index level, SIP start date, and other things related to your investment. This is the best type of SIP for investors who are just starting and have limited information about the market. However, a trigger SIP may raise speculations, so it is not quite recommended.

Benefits of SIP investment

If you do not have the prior financial knowledge and are a beginner at investing, then SIP is perhaps the best way to start. A SIP involves the premium getting deducted from your bank account automatically on a specific day of the month. This premium is credited automatically to your mutual fund.

So, the experience will be hassle-free for you. You also become financially disciplined due to periodicity.

1. Convenience

By now, it must be clear to you that SIP keeps you relaxed about your investments. You just need to submit an application form and then initiate the auto-debit process of SIP premiums.

2. Rupee Cost Averaging

Your monthly premium will be constant for a long period. Since the premium remains fixed in SIP, so the value of each unit is averaged out. So, you will buy more units when the market is down and fewer units when the market is high. This way you can take advantage of the volatility in the market.

3. Power of Compounding

SIP instills financial discipline in you and this way you can grow your investment. As the premium deposition is automated, so your investment increases unlike the case in lumpsum. Your small monthly premiums will one day grow to become a large corpus due to the reinvestments and returns compounded over a long term.

For example, if you pay a premium of INR 1000 every month towards a SIP with an average return rate of 10%, then the total amount will grow to become INR 7,18,259 owing to the compounding effect.

To know more read here: Power of compounding.

4. Higher returns

Mutual funds provide higher returns as compared to Recurring Deposits (RDs), Fixed Deposits (FDs), and other conventional methods.

Top SIP mutual funds in India

Top 10 best debt mutual funds for 5 years and 3 years

Below is the list of 10 Best debt Mutual funds to invest by SIP

Sl. No. Fund Name 3 yr returns (%) 5 yr returns (%)
1. Nippon India Low Duration Fund 7.19% 7.55%
2. UTI-ST Income Fund-Inst 3.67% 5.88%
3. Aditya Birla Sun Life Savings Fund 7.78% 8.17%
4. HDFC Short Term Debt Fund 8.84% 8.76%
5. DSP Credit Rank Fund 1.59% 4.77%
6. UTI Treasury Advantage Fund 3.51% 5.47%
7. L&T Low Duration Fund 6.31% 7.7%
8. Aditya Birla Sun Life Credit Risk 4.87% 7.04%
9. Aditya Birla Sun Life Medium Term Plan 2.02% 5.2%
10. Kotak Dynamic Bond Fund Direct-Growth 9.73% 10.66%

Top 10 best Equity mutual funds SIP plans 5 years and 3 years

Below is the list of 10 Best Equity Mutual funds to invest by SIP

Sl. No. Fund Name 3 yr returns (%) 5 yr returns (%)
1. Mirae Asset Large Cap Fund 4.44% 8.37%
2. Axis Bluechip Fund 9.39% 8.78%
3. ICICI Prudential Bluechip Fund 2.76% 6.31%
4. SBI Bluechip Fund 1.66% 5.43%
5. SBI Magnum Multicap Fund 1.31% 6.26%
6. Aditya Birla Sun Life Frontline Equity Fund 0.43% 4.79%
7. L&T India Value Fund -2.35% 5.47%
8. Mirae Asset Emerging Bluechip Fund 5.45% 11.98%
9. Kotak Standard Multicap Fund 2.91% 7.68%
10. Axis Focused 25 Fund 5.77% 8.89%

When to invest in a sip in India?

You can start SIP investments anytime you feel like. However, make sure that you select a plan that suits your long-term financial objectives. Also, the risk associated with the SIP should be minimum according to your needs. Since SIP investments make you financially disciplined, so the sooner you purchase a SIP, the better.

SIP Calculator

A SIP calculator is a calculation tool, that does all your SIP investment calculations for you. You just need to provide some details in this tool such as the amount you can invest every month, the expected yearly return rate, the duration of the SIP. It provides you with the overall estimate of the return. By using the SIP calculator, you can do a comparison between the returns from SIP and other investment plans.

You just need to enter the following details in the SIP Calculator:

  • SIP or Lumpsum
  • Monthly Investment/ Monthly premium
  • Number of Years (Investment Tenure)
  • Return rate

There is another kind of calculator also, which is called the reverse SIP calculator. To calculate in this, you have to provide an expected yearly return, SIP duration and the target amount. Overall SIP calculator is a very beneficial tool, which offers you to know about the estimated return that you will earn after the investment time period.

Here are the three most important advantages of using SIP calculator:

  1. It provides a person with the estimated value of his/her return.
  2. It guides a person in determining the amount of money he/she wants to invest.
  3. It provides a person with details about the amount of money he/she invested.

The formula in which SIP calculator does it’s all calculations is the following:

M = P *({[ 1+i ] n-1 } /1 ) * (1+i ).

M= The amount a person receives upon maturity.

P= The amount a person invests at regular intervals.

i= Periodic rate of interest.

n= Number of the investor’s payments.

SIP Investment Vs One-time investment

Lump-sum investment/ One-time investment SIP Investment
Investors need to pay a lump-sum at once. Investors have to pay periodic premiums every month.
A lump-sum investment makes more money when the market is high. The SIP investment earns higher returns on your investment when the market is low.
Lump-sum investment can lead to a huge loss if the market fluctuates. SIP investment deals properly with market fluctuations since it makes use of rupee cost averaging.

How to start investing in SIP Plans?

Investing in SIPs involves a simple and convenient procedure and you can also do it from home online. Go through the following steps while investing in SIPs:

1. Investment Goal

Your financial goal should be clear in your mind. You should choose a fund as per your needs and future investment goals.

2. Suitable Plan

There are hundreds of SIPs available in the market. Analyze the plans as per your needs and their past performance. Besides, check if the fund will meet your goals or not and then choose the plan accordingly.

3. KYC

SIP mutual funds need a net-banking account and KYC documentation as well. You can also choose to submit an e-KYC option too and then upload the documents

How much should you invest in a SIP?

When you are saving or investing to achieve a financial goal, then it might not be right to work with rough estimations. Make sure that you make a thorough financial plan and keep real numbers in your calculation.

An organized plan will help you in achieving these goals. The right mutual fund scheme will manage your investment portfolio in a way that works in your favor. In India, you can start investing in SIPs with as low as INR 500. So, investing with a minimum of INR 500 over a fixed tenure will also help you to reach your financial goal.

SIP benefits to save income tax

If you buy an ELSS (Equity Linked Savings Scheme) in SIP mode, then you can avail of the tax benefits. ELSS is a government-approved tax savings scheme and you can easily claim the tax benefits under Section 80C of the IT Act, 1861 if you purchase an ELSS via SIP.

Dos and don’ts while investing sip

1. Wrong fund

The first step while investing in a SIP mutual fund is choosing a fund/funds to invest your hard-earned money in. It is recommended that you study and analyze the mutual fund properly before starting the investment. In case you choose a wrong fund that does not go as per your requirements, then your financial goals will be ruined.

2. High Investment

One of the major perks of investing in SIPs is that they allow you to invest in small amounts. Make sure you do not buy such a fund whose premiums might become too costly for you in the future. So, choose such a fund and such a premium amount that would be affordable for you. Otherwise, if you discontinue paying the premiums then you wouldn’t get the returns you aimed at while buying the fund.

3. Investment Tenure

Do not go for a short-term investment while investing in SIP!

The returns you get via a SIP investment depend on the time duration for which you stay invested in the plan. The thumb rule says that the longer the investment term, the higher will be the investment value.

4. Do not set an unrealistic goal

People who are beginners at investing and immature when it comes to financing often set unrealistic goals for themselves. Please do not expect dramatic returns from your investments. Try to keep your expectations limited to average returns only. You can expect around 10% to 20% returns but expecting 50% to 100% is way too unrealistic.

5. Dividend or Growth?

One of the best things about SIPs is that you can switch anytime from dividends to growth and vice versa. In case of dividends, the interest you get is the simple interest on the principal amount. But, if you choose the Growth option, then you will earn based on the principle of compounding (interest is earned on the interest). Many people go for the dividend option overgrowth. But, you can switch between dividend and growth accordingly and achieve your investment goals.

6. Boost Your SIP

You can also have a combination of regular and lump sum investments as this will get you better returns than regular SIPs. Life is all about highs and lows. When you are in a good financial condition, then you can add a lump sum to your SIP under the same portfolio. This will help in boosting your SIP.

FAQs

· What if I miss a premium of my SIP?

Ans: It’s okay if you miss a SIP payment. Your account won’t be deactivated. Besides, many mutual fund houses do offer the privilege of pausing the payment.

· Is it safe to invest in SIP?

Ans: SIP is one of the safest processes of investment since it allows you to invest a specific amount regularly. SIP provides you with a planned investment approach and develops financial discipline in them.

· What is the minimum amount that I can invest in a SIP?

Ans: You can start a SIP with a minimum of INR 500 per month.

· Do all SIP investments offer tax benefits?

Ans: The investments made via SIP in ELSS offer tax deductions up to a maximum of INR 1.5 lakh under section 80C of the IT Act.

· How to shorten the SIP duration?

Ans: You can send a written application to the fund manager or make an online request. But, it is advisable that the investor should complete paying the premiums for the minimum investment period, i.e. 6 months.

· How to extend the tenure of my SIP?

Ans: You have the option of renewing your investment at the end of your tenure. You will have to fill up the renewal form and then choose the required duration of the investment.

· What is the maximum amount that you can invest in SIP?

Ans: The maximum amount that can be invested in SIP has no limitation.

· Is SIP the right option for long-term financial goals?

Ans: Yes, SIP is one of the best options to build a large corpus that will fulfill your long-term financial goals as it provides higher and stable returns over the long-term.

· How does SIP work?

Ans: SIP involves paying monthly premiums which are then invested in securities that earn returns. However, you can also make weekly, monthly, or quarterly investments as per your preferences.

· Can I buy a SIP online?

Ans: Yes, you can easily do that via the fund’s online website or through a net banking app/ partner website. You just have to fill-up the form, provide the necessary documents, and pay the first premium online, and just like that, you have now started a SIP.

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