The concept of Systematic Investment plan (SIP) has been gaining a lot of popularity amongst Indian investors since last few years. It is an excellent way to create a long-term savings habit. It helps in creating a large corpus for the future Financial goals. In a SIP, a fixed amount is invested monthly in a fund on a specific date by the investor. Once you begin Investing monthly in a SIP for a longer period of time, your money starts growing every day (being invested in the stock Market). Systematic Investment Plan helps you to average your purchase cost and maximise returns. When an investor invests regularly over a period, irrespective of the market conditions, he would get more units when the market is low & less units when the market is high. This averages out the purchase cost of your mutual fund units. Similarly, let’s check some of the most important benefits of a SIP in the long-run.
When you invest over a longer duration, your investment starts compounding. This means that when you earn returns on the returns earned by your investment, your money would start compounding. This helps you to build a large corpus over the long run with regular small investments.
Helps in Achieving Goals
SIP is a smart way to achieve all your long-term financial goals like retirement, marriage, purchase of a house/car, etc. Investors can simply start investing in Mutual Funds as per their financial goals and attain them at certain period of time. If one starts investing at an early age, there is enough time for their SIP to grow. In this way it also becomes easier to fulfil all their goals on time.
Affordable
One of the most attractive parts of a systematic investment plan is its affordability. One can invest an amount as low as INR 500, which enables a route to a large number of Indians to initiate into investments. So, one who can’t make a lump sum payment, can invest via a SIP in Mutual Funds.
Why SIP is Best for Long Term Investment?
Investors often wonder of how SIPs are more profitable in the long-run than lump sum mode. Well, the historical data says so! Let’s check the data of the worst period of the stock market.
The worst period to start investing was around September 1994 (this was the time when the stock market had peaked). If one looks at the market data, the investor who had invested a lump sum sat on negative returns for 59 months (nearly 5 years!). The investor broke even in about July of 1999. The next year though some returns were generated, these returns were short lived due to the 2000 stock market crash subsequently. After suffering for another 4 years (with negative returns) and the investor finally became positive in October 2003. This was possibly the worst time to have invested a lump sum.
What happened to the SIP investor? The systematic Investment Plan investor was negative for only 19 months and started posting profits, however, these were short-lived. The SIP investors were up again by May 1999 after suffering interim losses. While the journey still continued to be shaky, SIP investors showed profits in the Portfolio much earlier.
So, who made better profits? The maximum loss for the lump sum investor was nearly 40%, whereas for the SIP investor was 23%. The systematic investment plan investor had a faster recovery period as well as a lower loss in the portfolio.
Best Mutual Funds for Long Term SIP Investment
Some of the best mutual funds SIP for a long-term are as follows-
Best Large Cap Funds for Long Term SIP
Large cap funds are a type of Equity Mutual Funds where the corpus is invested in the stocks of companies with large market capitalization. These companies are mainly large firms with large businesses & big teams. The market capitalization of these companies is INR 1000 Cr & more. Since, the investments are made in big companies, these firms have more possibility of showing year on year steady growth, which in turns also offers stability over a time. These funds are considered to be safe & less volatile to the market fluctuations compared to mid & Small cap funds.
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Feb 23
Best Mid & Small Cap Funds for Long Term SIP
Mid cap and small cap funds are a type of equity mutual fund that invests in emerging companies in India. mid cap funds invest in companies which have a market capitalization of INR 500 to 1000 Cr. And, small caps are typically defined as firms with a market cap of around INR 500 Crore. These firms are called the future leader of the market. If the company does well in the future, these funds have a great potential to deliver good returns in the long-run. But, the risk is higher in mid & small cap funds. So, when an investor is investing in these funds, they should invest for a longer duration.
Fund
NAV
Net Assets (Cr)
Min SIP Investment
3 MO (%)
6 MO (%)
1 YR (%)
3 YR (%)
5 YR (%)
2022 (%)
PGIM India Midcap Opportunities Fund Growth
₹42.92 ↑ 0.22
₹7,558
1,000
-3.6
-2.8
1.2
29.2
16.8
-1.7
Kotak Small Cap Fund Growth
₹160.813 ↑ 0.51
₹8,498
1,000
-2.4
-1.3
0.4
26.1
15
-3.1
Axis Mid Cap Fund Growth
₹66.12 ↑ 0.39
₹19,144
500
-3.1
-3.4
0
16
15
-5.1
Motilal Oswal Midcap 30 Fund Growth
₹50.1227 ↓ -0.25
₹3,627
500
-2.3
3.6
12.8
20.6
14.9
10.7
Nippon India Small Cap Fund Growth
₹91.8834 ↑ 0.46
₹23,701
100
-0.5
5.6
10.3
30.3
14.7
6.5
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Feb 23
Best Diversified Funds for Long Term SIP
Diversified Funds are a class of equity mutual funds. These are the funds that invest across market capitalization, i.e., in large, mid & small cap funds. As, diversified funds invest across market caps, they master in balancing the portfolio. Investors can create a good balance in their portfolio by investing in diversified funds. However, they would still be affected by the Volatility of equities during an unstable market condition.
Fund
NAV
Net Assets (Cr)
Min SIP Investment
3 MO (%)
6 MO (%)
1 YR (%)
3 YR (%)
5 YR (%)
2022 (%)
Parag Parikh Long Term Equity Fund Growth
₹49.3824 ↑ 0.05
₹28,248
1,000
0.7
1.5
1
20.8
16.2
-7.2
HDFC Equity Fund Growth
₹1,144.86 ↑ 6.78
₹32,155
300
-0.9
5.5
14
20.4
12.4
18.3
PGIM India Diversified Equity Fund Growth
₹25 ↑ 0.08
₹5,284
1,000
-3.2
-0.9
-3.7
19.9
13.4
-6.4
Mahindra Badhat Yojana Growth
₹20.2057 ↑ 0.11
₹1,545
500
-5.2
-0.2
-0.6
19
13.1
1.6
Nippon India Multi Cap Fund Growth
₹165.429 ↑ 0.90
₹14,160
100
-1.5
4.5
13.9
18.6
11.7
14.1
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Feb 23
Best Sector Funds for SIP Long Term
sector funds invests in securities of specific sectors of the Economy, such as telecom, banking, FMCG, Information Technology (IT), pharmaceutical, and infrastructure, etc. For instance, a pharma fund can invest only in stocks of pharma companies and a banking sector fund can invest in banks. Being a sector-specific fund, the risk in such funds is higher. Thus, an investor should have an in-depth knowledge about the specific sector before investing in the fund.
Fund
NAV
Net Assets (Cr)
Min SIP Investment
3 MO (%)
6 MO (%)
1 YR (%)
3 YR (%)
5 YR (%)
2022 (%)
Franklin Build India Fund Growth
₹70.9367 ↑ 0.08
₹1,214
500
-1.1
6.6
10.7
19.8
11.1
11.2
Sundaram Rural and Consumption Fund Growth
₹61.2899 ↑ 0.50
₹1,179
100
-3.6
-1.3
8.8
11.1
7.6
9.3
DSP BlackRock Natural Resources and New Energy Fund Growth
₹57.273 ↑ 0.32
₹697
500
3.4
8.4
7.4
23.8
9.5
9.8
ICICI Prudential Banking and Financial Services Fund Growth
₹88.7 ↑ 0.24
₹5,519
100
-1
3.4
6.2
8.8
8.2
11.9
IDFC Infrastructure Fund Growth
₹24.952 ↑ 0.12
₹631
100
0
5.2
5.9
20.6
6
1.7
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Feb 23
However, if an investor had invested ₹10,000 per month in this mutual funds SIP plan 5 years ago, its ₹10,000 monthly investment would have turned to 11.98 lakh today. Value Research has given 5-star rating to this mid-cap mutual fund plan.
However, if an investor had invested ₹10,000 per month in this mutual funds SIP plan 5 years ago, its ₹10,000 monthly investment would have turned to 11.98 lakh today. Value Research has given 5-star rating to this mid-cap mutual fund plan.
According to tax and investment experts, if an investor invests ₹10,000 per month in mutual fund SIP for 30 years, he or she can accumulate around ₹12.7 crore at the time of maturity provided it has used 10 per cent annual step-up.
Here is what a Rs 50,000 monthly in a Systematic Investment Plan can do over the years: 5 year SIP of Rs 50000 monthly = Rs 42 lakh. 10 year SIP of Rs 50000 monthly = Rs 1.1 crore.
Their gains will be added to your income as 'income from other sources. ' Here, you will not incur income tax on SIP returns if they are below ₹1 lakh for a financial year.
By investing Rs 50,000 per month one time, he could look to accumulate Rs.19.16 lakhs in twenty years with 20% annualized returns. We have taken a weighted average of the return of each fund after considering the lower 3-year and 5-year returns as the return over the 20 years.
Your monthly investments of Rs 15,000 in equity funds can grow into Rs 4.8 crore in 30 years! This is the magic of compounding at play. Compared with other options like fixed deposits, PF, etc. (where you won't get more than 7-8% returns), equity funds are great for real inflation-beating wealth creation.
If someone begins a SIP of 5000 per month for a span of 20 years, at 12% assumed annualized rate of return per annum, your total investment in 20 years is Rs. 12 lakh and the accumulated corpus at the end of tenure is close to Rs. 50 lakhs.
Similarly, if you stay invested in the scheme for 15 years, the future amount of your investment will be Rs 25.22 lakh, vis-a-vis an invested amount of Rs 9 lakh (i.e. 5000*15*12).
The best recession stocks include consumer staples, utilities and healthcare companies, all of which produce goods and services that consumers can't do without, no matter how bad the economy gets.
Despite what some may think, 2023 is still a good year to invest in real estate, thanks to advantages like long-term appreciation, steady rental income, and the opportunity to hedge against inflation. Mortgage rates are expected to decline, but the housing market is likely to remain competitive due to low supply.
In 2023, economic activity is projected to stagnate, with rising unemployment and falling inflation. Interest rates are projected to remain high initially and then gradually decrease in the next few years as inflation continues to slow.
If an investor invests 20,000 per month for 10 years at the interest rate of 12%, he will be able to generate INR 47 lakh, i.e., more than double the amount he earned in the first five years. In addition, the earnings in 15 years will double the income that an investor had generated in the first 10 years.
If you'd invested $600 in a lump sum and allowed it to grow for 10 years at 10.3% a year, you'd have almost exactly $1,600. Stock market returns are never guaranteed, of course. But the longer your holding period is, the higher your odds of success are.
According to FIRE, your portfolio should cover 25 times your annual expenses. Then, if you withdraw 4% of your portfolio every year, your portfolio will continue to grow and won't be compromised. We can apply this formula to the goal of making $3,000 a month like this: $3,000 x 12 months x 25 years = $900,000.
If you can afford to put away $1,400 per month, you could potentially save your first $100k in just 5 years. If that's too much, aim for even half that (or whatever you can). Thanks to compound interest, just $700 per month could become $100k in 9 years. “The first $100,000 is the hardest to save.”
Rs 1 lakh SIP: It would take 5 years 10 months to reach Rs 1 crore with Rs 1 lakh monthly SIP in a mutual fund scheme. Increasing the SIP amount by 5% annually would let you reach Rs 1 crore in 5 years 5 months at 12% interest.
So, in the first year you will have an SIP of Rs 5,000 per month, in the second year it will be Rs 5,500 (Rs 5,000+10 per cent of Rs 5,000), in the third year it will be Rs 6,050 (Rs 5,500 + 10 per cent of Rs 5,500) and so on. This will help you to meet your target corpus of Rs 1 core in 21 years. See table below.
Yes! If you're consistent with your ₹1000 SIP every month for 20 years then it has the power to compound and accumulate into a large corpus. This consistency can transform your future financial health. We used the smooth Cube SIP calculator to calculate the SIP returns.
FV = Future value or the amount you get at maturity. For example, you invest Rs 1,000 a month in a mutual fund scheme using the systematic investment plan or SIP route. The investment is for 10 years, with an estimated rate of return of 8% per year. You have i = r/100/12 = 8/100/12 = 0.006667.
Imagine you wish to invest Rs. 4,000 per month for 10 years. The expected rate of return is 10%. You need to input these values in the specified boxes, and the calculator gives you the corpus you would earn. In this case, you would earn a total corpus of Rs. 8.3 lakhs.
If your goal is to create a corpus of ₹5 Cr in 20 years, investing in mutual funds through a systematic investment plan (SIP) can be a smart and effective way to achieve your financial goals. To achieve a corpus of ₹5 Cr in 20 years, you would need to invest approximately ₹1,50,000 per month through a SIP.
3000 SIP will become Rs.1,71, 647 in 5 years. You can start investing in any of the best SIP for 3000 per month or even more. You can consider other SIP schemes but make sure that you go through the reputation of the fund house, NAV, annual returns, and risk factor.
Best SIP Plan to Invest for 10 Year. SIP is an option for investors who prefer to invest little amounts over the long term in order to achieve their financial goals. Typically, a long-term investment horizon is preferable when investing in equity schemes.
Systematic Investment Plan is a better investment option in comparison to Fixed Deposit especially if you consider the flexibility of investment, advantage of diversification, tax benefits, and higher returns. That is why it is better to invest in a systematic investment plan than in fixed deposit.
However, there is no guarantee or assurance of returns by investing in a SIP. This is because a mutual fund scheme invests in a basket of securities in different proportions. For example, a large-cap fund could have 30-40 stocks in its portfolio.
investing in Mutual Funds via SIP (Systematic Investment plan) involves Market linked risks, that are certainly higher for Equity Funds than debt and balanced Mutual Funds. The risk in SIP depends on the investment option that is chosen considering the risk profile, risk appetite and liquidity.
Yes, we are talking about debt mutual funds here, not equity mutual funds. Debt mutual funds are likely to offer better returns in 2023. They will offer even higher returns when the RBI starts cutting interest rates.
The longer an investment window you give yourself, the more wealth you might gain over time. It's a smart idea to invest extra cash in 2023 if you're managing your bills well. Before you invest, make sure you have money set aside for emergencies and eliminate high-interest debt.
10% Return for S&P 500 a Real Possibility by End of 2023
Short of a recession — a very real possibility — consensus estimates are for about 5% earnings growth (opens in new tab) for S&P 500 companies in 2023. That's certainly less than what it was in years past, but still respectable.
According to Post Office RD Calculator, if you invest Rs 5,000 per month for five years the total return on your investment will be Rs 48,740 (with monthly compounding frequency). So the total amount that you will get after five years would be Rs 3,48,740.
It has an average annual growth rate of 21.08 percent and has given a return of 14 percent in the last year. If a SIP of Rs 10,000 had been started in it 5 years ago, today this amount would have been Rs 12.72 lakh. The fund has given an annual return of 30.62 percent in these five years.
Introduction: My name is Edwin Metz, I am a fair, energetic, helpful, brave, outstanding, nice, helpful person who loves writing and wants to share my knowledge and understanding with you.
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