What is SIP?
A Systematic Investment Plan, as the name signifies, is a convenient and systematic method of planning investments into mutual funds. SIP usage is easily manageable as mutual funds offer the convenience of investing an amount as low as even Rs 100. The amount and the option of paying in regular monthly/quarterly/annual intervals make SIP a hero among all the mutual fund schemes. This mode of investment is also considered profitable due to its average costing and capacity for compounding.
The potential benefits of investing through the SIP way are:
- Start with Lowest Amount – This is the most beneficial feature of SIPs, that they can be started with a minimal amount. The particular trait facilitates ease of investment as everybody cannot invest a large lump sum of money into something.
- Automated Payment to Ensure Regularity – As we start investing in SIPs, the amount is automatically deducted from our bank accounts, thereby ensuring regular and easy investment.
- Flexibility of Tenure – A key feature and benefit of investing in SIPs is the flexibility of tenure. Irrespective of the amount invested, the investor can withdraw even partial or the whole amount, skip a payment or cancel the SIP without facing any losses or penalties. Also, the amount of investment can be increased or decreased at any point in time.
- Rupee cost Averaging done right – The most characteristic feature of investing into SIPs is the Rupee Cost Averaging. As the market goes down, more units can be purchased with the same amount of money and vice versa as the market goes up. This helps in overcoming the volatility of the market and eases out investments. However, this feature works great when SIPs are extended for a longer period of time.
- Capacity of Compounding– SIPs give great returns when invested over a longer time than short-term funds.
SIPs have shown an enormous amount of growth due to the numerous benefits they offer. However, as first-time investors or beginners, we must ensure that we have the correct information when investing in anything. The tax implications of SIPs depend on whether we have invested in equity or non-equity funds. Here are the tax strata for SIPs:-
|Fund Type||Holding Period For Long Term||Short Term||Long Term|
|Equity Oriented Funds||1 year||15 %||10 % if LTCG during the year exceeds Rs. 1 lakh. LTCG less than Rs. 1 lakh exempt from taxation.|
|Hybrid Funds||More than 65 % of the portfolio invested in equity, taxation the same as equity funds.|
|Debt oriented Funds||3 years||Slab rate||20% with indexation|
|International Funds||3 years||Slab rate||20 % with indexation|
Given below is a list of the Best Mutual Fund SIP schemes on the website KUVERA that are worth investing in the year 2022:-
|NAME OF THE FUND||NAV||1 DAY||1 YEAR||3 YEAR|
|BOI AXA Credit Risk Growth Direct Plan||10.4115||0.01 %||142.50 %||-4.93 %|
|SBI Magnum Children’s Benefit Investment Growth Direct Plan||22.6772||-1.06 %||36.73 %||NA|
|SBI Contra Fund Direct plan- Growth||4490.53||NA||13.94 %||22.38 %|
|Axis Mid Cap Growth Direct Plan||68.360||-1.01 %||2.8 %||19.8 %|
|UTI Credit Risk Growth Direct Plan||15.2490||-0.03 %||20.51 %||-4.41 %|
|ICICI Prudential Multi Asset Growth Direct Plan||461.7709||-0.49 %||17.80 %||17.46 %|
|Parag Parikh Tax Saver Growth Direct Plan||18.5434||-0.87 %||13.47 %||NA|
|Nippon India Small Cap Bonus Bonus Growth Direct Plan||86.4360||-0.67 %||13.09 %||26.50 %|
- Which mutual funds are the best for investing over a long-term basis?
Equity-oriented mutual funds are the best for long-term investments.
- How can we choose the best mutual funds in India?
Kuvera has a solution to all your problems. We have a detailed analysis of all kinds of mutual funds and their year-wise comparison with other funds as well.
- How to register for SIPs?
Please sign up on our website Kuvera, and with little paperwork, you can start investing within no time. Our catalogue contains a wide range of options; you can look at the various options, compare and invest.
- Are SIPs good for long-term investments?
Yes, SIPs are suitable for long-term investment and during market slowdown. When the market goes down, we can get more units for the same amount, lowering the average cost.
- Can we start a SIP when the market is high?
There is no definite time to start a SIP. Whenever you think of starting it, you can begin investing and average out the market fluctuations.