An investor can increase their savings significantly by making long-term, systematic investments into mutual funds through the Systematic Investment Plan (SIP) method.
An investor using mutual funds can diversify their holdings by purchasing a variety of equities and debt securities from various industries, topics, and sectors.
With the SIP approach, investors can start with tiny amounts and gradually increase or decrease their holdings over time based on the way the market as a whole is moving. In fact, the SIP approach can be the best option if one does not have lump sum funds to invest with but still wishes to beat inflation and take part in the stock market’s growth.
Furthermore, there is never a completely risk-free investment. Thus, for most small investors, the best strategy to manage risk is to invest in the stock market through mutual funds using systematic investment plans, or SIPs.
Additionally, SIPs encourage disciplined investing since they allow individuals to allocate their funds methodically without having to worry too much about daily fluctuations in the market.
Even if mutual funds are a tried-and-true way for average investors to get into the stock market, it would be beneficial for them to logically distribute their money over a number of different mutual funds.
What are the Best Mutual Funds for SIP?
So, how does one go about selecting which mutual funds to buy this year using a systematic investment plan?
To achieve this, compile a list of the top-performing mutual funds that have the potential to excel in the upcoming year.
Top-performing mutual funds within a mutual fund category are usually the best options for a systematic investment plan (SIP). Additionally, in terms of investing flexibility, affordability, and liquidity, the top SIP plans typically outperform the competition.
The fact that inflows into mutual funds through the SIP method reached Rs. 1.83 lakh crore in 2023 after inflows of Rs. 17610 crore in December 2023 is evidence that SIPs have taken off significantly. The total amount for the year 2022 was Rs. 1.49 lakh crore, a 23% increase from the previous year.
How do SIPs work?
The first thing an investor should do before investing via SIP is confirm that he or she is KYC-compliant. For this, the individual must submit the necessary documentation, such as bank account information and confirmation of identity. Following that, they are free to invest using asset management businesses’ web portals or other online aggregator platforms.
Once the money is deducted from their account, investors are assigned units based on the net asset value of the day.
Top 10 Best Mutual Funds for SIP to Invest In India
Here are the top 10 best mutual funds to invest in 2024:
1. HDFC Mid-Cap Opportunities Fund
2. Parag Parikh Flexi Cap Fund
3. ICICI Pru Bluechip Fund
4. HDFC Flexi Cap Fund
5. Nippon India Small Cap Fund
6. HDFC Balanced Advantage Fund
7. ICICI Prudential Equity & Debt Fund
8. ICICI Prudential Corporate Bond Fund
9. ICICI Prudential Short-Term Fund
10. LIC MF Gold ETF FoF
The best mutual funds to invest in are those that provide the highest returns on investment, while the process of selecting such funds can be subjective and often dependent on other criteria. As a result, the top ten funds’ list may vary if these parameters change.
Overview of the Best SIP Plans to Invest in 2024
HDFC Mid-size Opportunities Fund is a mid-size fund that invests 93.21% in Indian equities, with 52.58% in mid-cap stocks, 5.57% in large-cap stocks, and 18.09% in small-cap stocks. It is best suited for persons who want to stay invested for 3-4 years and earn significant profits, but they must not be risk averse, as it is an exceptionally risky fund.
Also Read – Best SIP Plan For 1000 per Month 2024 – Best Mutual Funds SIP Plans
Parag Parikh Flexi Cap Fund is a flexi-cap fund that invests 70.63% in domestic equities. Large caps account for 48.07%, midcaps for 5.8%, and small caps for 7.03%. It also invests 0.31% in debt, including 0.01% in government bonds and the remaining 0.3% in low-risk assets.
ICICI Pru Bluechip is appropriate for investors who wish to stay involved in equity for the next five years but are willing to take moderate to high risk. It invests 91.39% in Indian stocks, with the majority (81.37%) in large caps, 4.85% in midcaps, and the remainder in small caps. 0.47% of the investment is debt, primarily in government securities.
HDFC Flexi Cap is also a flexicap fund, with 88.67% invested in domestic stocks, including 62.54% in large caps. Only 6.2% of its assets are midcaps, with 3.65% in smallcaps. This, too, is a high-risk fund suitable for investors seeking substantial returns over a five-year period.
Nippon India Small Cap is one of the top-performing small-cap funds in the Indian mutual fund industry. It invests 96.42% of its funds in equities, with small cap companies accounting for 55.41%. The fund invests 9.86% in midcap equities and 5.83% in large companies. Given its portfolio, this is a very hazardous fund, yet it has the potential to generate very significant returns.
HDFC Balanced Advantage Fund is a high-performing hybrid mutual fund with 68.28% equity exposure, including 42.28% in large cap companies, 8.27% in small cap stocks, and the remainder in midcaps. 28.63% of the fund’s investment is in debt, with the majority being in government securities and 11.79% in low risk securities.
The ICICI Prudential Equity & Debt Fund invests 71.65% in equities, with 53.74% in large caps, 8.07% in midcaps, and a minor stake in small caps. Approximately 17.92% of the fund is invested in debt, the majority of which is in government securities.
ICICI Prudential Corporate Bond Fund is a debt-oriented fund that invests 94.29% in debt. Of this, 71.85% is in low-risk securities, with the remainder in government bonds. This fund is best suited for investors seeking consistent long-term returns.
ICICI Prudential Short Term Fund is 88.95% invested in debt, with 54% in low-risk securities and the balance in government bonds. This is a fantastic fund for folks who want to park their money for up to three years. This is a suitable alternative to fixed deposits.
LIC MF Gold ETF FoF has assets under management that exceed Rs. 27400 crore. It is a high-risk gold fund with returns of more than 8.3% over the past year.
Performance Overview of the Top Ten Best Mutual Funds to Invest Now:
| Funds | Category | 1 Yr Returns |
| HDFC Mid-Cap Opp Dir Invest Online | Equity | 49.98 |
| Parag Parikh Flexi Cap Dir Invest Online | Equity | 37.02 |
| ICICI Pru Bluechip Dir Invest Now | Equity | 30.57 |
| HDFC Flexi Cap Dir Invest Online | Equity | 32.64 |
| Nippon Ind Small Cap Dir Invest Online | Equity | 54.93 |
| HDFC Balanced Advtg Dir Invest Online | Hybrid | 35.04 |
| ICICI Pru Eqt & Debt Dir Invest Now | Hybrid | 31.08 |
| ICICI Pru Corp Bond Dir Invest Now | Debt | 7.88 |
| ICICI Pru ST Dir Invest Now | Debt | 8.15 |
| LIC MF Gold ETF FoF Dir Invest Online | Commodities | 8.36 |
To compile a list of the top mutual funds to invest in via SIP in 2024, we examined the performance of mutual funds across four categories—equity, hybrid, debt, and commodities—over the previous year.
Factors to Consider Before Investing in the Best Mutual Funds for SIP 2024
The finest mutual fund SIP programs assist investors in achieving their long-term goals. SIPs are popular because they allow small retail investors to make small investments that compound over time. Investors can also choose from a variety of investment frequencies, ranging from daily to monthly to quarterly, depending on how much money they have available.
Before making a SIP investment, investors should examine the following criteria.
Identify your needs-The ability to invest a tiny amount helps create wealth over time. SIP investments have no upper limit. Starting a SIP with a small amount can be far more cost-effective than investing in one large sum.
Maintain an individual SIP for each respective goal: To assess a SIP’s overall performance, different SIPs should be linked to each milestone. This helps maintain track of all objectives and calculates fund performance, making it easy to implement corrective steps when necessary.
Increase Your Investments Based On Your Personal Risk Tolerance: The risk appetite that defines the objectivity of an investment is influenced by a variety of elements, including income, psychological strength, and time horizon. As a result, someone with a long time horizon can select several of the top performing SIP plans and invest a portion of the total in each. This helps to diversify the investment portfolio and reduces market risks. However, individuals with a low risk tolerance or limited work duration should only invest in short-term mutual funds.
Within a few years, evaluate the portfolio’s performance:The duration of investing is an essential aspect. Although there is no set rule for how frequently one should examine the fund’s performance, the SIP mutual fund portfolio should be reviewed every three to four years.
Benefits of Investing in the Best SIP Plans
Starting a SIP can be rewarding because it allows the investor to invest, track, and save more in small ticket quantities and with ease.
Here are some of the benefits of investing in the finest SIP plans:
The power of compounding: Compounding yields returns that are frequently substantially higher than a single lump sum investment. If you have more disposable income at the end of the month, you might consider investing in one of the top SIPs.
Furthermore, mutual funds do not incur any penalties if the SIP needs to be stopped at any time. Furthermore, most SIPs allow investors to skip a month without incurring any fees or penalty.
Tax on SIP Investment
All profits from mutual fund investments are taxed as ‘capital gains’. However, there is a subclassification based on the fund kind and length.
For tax purposes, gains from equity fund units held for more than 12 months are classified as Long Term Capital Gain (LTCG). If they are kept for less than 12 months, the gains are classified as short-term capital gains. Debt fund units must be held for longer than 36 months to qualify for LTCG taxation. However, the government eliminated the LTCG tax benefit for most debt fund categories last year.
Why Invest through SIP?
Most investors find it nearly impossible to time markets because they lack sufficient expertise and do not have the time to investigate and purchase certain stocks or bonds. Here’s where SIPs come in. SIPs can help with rupee cost averaging. The objective is to average out the price at which mutual fund units are purchased.
One advantage of investing with SIPs is that they allow for rupee cost averaging, which helps to lessen market volatility.
This is accomplished by purchasing more units when the market is down and fewer when the market is rising. Mutual funds are handled by professional money managers that have the knowledge to buy, sell, and monitor investments, so an investor does not have to individually respond to market fluctuations.
How to invest in Best SIP Plans?
To invest in the best mutual funds for SIP 2024, follow this step-by-step guide:
Step 1: To begin a SIP, contact a broker or financial counsellor, or just sign up with a mutual fund company directly.
Step 2: SIPs can be initiated online. To complete the online process, the investor must either register a new account or log into an existing one.
Step 3: After deciding on an investment platform, such as 5paisa, an investor can choose from a variety of investment options. After narrowing down the fund options, click Invest Now.
Step 4: Choose the amount of contribution and the duration of the SIP term. Also, choose a date for the SIP.
Step 5: Finally, submit the form after filling out all of the essential bank account details.
Best Mutual Funds for SIP-Conclusion
Simply saving diligently does not guarantee wealth accumulation. Investing is equally vital. Mutual funds provide greater diversification and value for money by assisting in the long-term growth of assets.
Investing in SIPs for long-term returns helps you save a big sum for the future. When the markets fall, having a lengthy time horizon allows you to receive more units for the same investment.
Having said that, selecting a mutual fund is a personal choice. You must ensure that you have thoroughly examined the fund house’s reputation, historical returns, and risk profile.
FAQs
Which SIP is best for 1 year?
For the short term, say, one year, an investor should select a SIP plan that provides consistent returns. Investors should ideally speak with their financial experts for a better understanding.
Can I withdraw my SIP anytime?
Most SIP plans allow investors to withdraw their money at any time. However, they can only withdraw funds from Equity Linked Savings Schemes (ELSS) after a three-year lock-in period. The lock-in period for schemes such as Retirement Savings Fund and Children’s Savings Fund is five years.
Should I invest lump sum or SIP?
When the market is on the rise, lump-sum investments are ideal. However, in a sinking market, it is prudent to choose a SIP plan depending on one’s financial objectives.
What happens if we cancel an SIP?
Once you cancel a SIP, the monthly sum will no longer be deducted from your bank account. If you stop your SIP, the mutual fund company will not charge you any penalties. The money will remain in the fund and continue to generate returns.
Is SIP good for the long term?
Yes, a systematic investing plan is beneficial in the long run since it allows an investor to cost average across a rising and declining market.