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SIP Investments

Mutual Funds allow investors access to schemes and offers across asset classes. So, you can choose from myriad underlying securities like stocks, bonds, money-market instruments, commodities or precious metals. Your choice of fund/s may depend upon these common investment objectives:

  • Your Investment Budget

  • Financial Goal/s

  • Tax-Efficiency

  • Risk-Taking Capacity

The first question you ask yourself before investing is, “Why should I invest?”. Let’s say you plan to buy a house, want to go on an exotic vacation or world tour, or, you simply want to create wealth. If you’re on a fixed income each month, leaving it idle will not help achieve your financial goals. You want your money to work for you. Which is why you should invest.

There are no upper or lower limits on how much money you can invest, you can start with as low as ₹500/- or as high as ₹1 lakh. However, most investors consider the tax implications of higher amounts before making their decision.

Once you’ve understood the tax implications, you then assess how much risk you are willing to, and, can take. If you are averse to risk, your investment choices will be vastly different from an investor who doesn’t mind highly risky investments.

The final dilemma for most investors is, whether to invest in one go (lump-sum) or in parts. Yes, you do have the option to invest in parts or installments, this investment method is also called ‘systematic payments’. In the mutual fund universe, systematic payments can be made for investment—SIP, withdrawal—SWP or transfer—STP.

A Systematic Investment Plan or SIP investment plan entails investing preset amounts at regular intervals (mostly each month). It is a smart way to invest because, you’re protecting your money from incurring heavy losses in case markets take a downturn. At the same time, you are planning your investment for a realistic and longer term. How it works is, you can set an amount you want to invest and give consent for parts of it to be debited from your bank account each month. With each installment, new units of a mutual fund will be purchased.

SIP Investment Plans Recommended by Angel BEE

A SIP investment plan is a disciplined approach in creating wealth and saving for the future. It is also the best way for mutual fund investors to minimise market risks and protect a potentially huge sum from (expected) losses. Moreover, you can expect good returns on your investment in the most recommended SIP mutual funds. Our recommendations are based on various types of Systematic Investment Plans:

  • Top-Up: This type of plan allows you to gradually increase your investment amount as time progresses. This helps you invest in the best funds and increase the amount according to a parallel increase in income.

  • Flexible: In this option you can either increase or decrease your periodic investment. You can use this option if you know that sometimes your budget is going to fluctuate. You can skip a payment or increase one based on your financial situation.

  • Perpetual: In this type of plan, an end date is not set, which means, you can redeem your investment at any time. However, it is recommended to set an end-date for your investment period.

  • Trigger: This type of plan allows you to set a ‘trigger’ like a target NAV, date or index level. This method isn’t recommended by investment experts because it may be interpreted as speculation.

Top SIP Mutual Funds in India

Investing in SIP mutual fund is not only smart but also convenient. Each payment allows you to purchase a certain number of units of a fund. The number of units you get also depends on the prevailing NAV of your fund at the time the amount is debited from your account. Which means, though your amount may be fixed (depending upon the fund type), the number of units may vary. The top systematic plans will give you not only relatively more units, but also better NAV. A good NAV is interpreted to give you better returns on investment. Here are the top plans in India:

Everything You Need to Know About SIP Investments

Here’s what you need to know about Systematic Investment Plans:

  • Planned Savings: These plans help you set realistic and scalable investment milestones. By keeping aside an amount periodically, not only are you saving for the future, but also compounding wealth.

  • Convenient: To begin a SIP all you need to do is agree to have a set amount debited from your bank account. This is more convenient than writing cheques for a broker.

  • Flexible: Some plan types allow you to change your payment amount, per your convenience. This also ensures you get maximum returns on each investment.

  • Long-Term Growth: In the initial phase of these plans, it would seem like the returns are minimal. However, in the long-term these plans can grow your wealth exponentially.

  • Tax Treatment: You can claim income-tax benefit under Section 80C of the Indian Income-Tax Act—1961. However, you should note, tax on long-term capital gains (LTCG) and dividend pay-outs will be applicable as well.

Why SIP Mutual Funds?

Here’s why you should invest in SIP mutual funds:

  • Wealth Creation: These plans not only ensure that your income is not idle, but that it also grows. If you have a moderate risk-taking capacity but are yet cautious of investing in lump-sum, then you should opt for these plans.

  • Budget Planning: You can set aside a periodic investment budget based on your financial objectives. Though you need very little to begin a systematic plan, you can choose to gradually increase or intermittently change this amount, based on your income needs.

  • Compounded Wealth: With these plans you can get the benefits of positive market movements. When your fund performs well or out-performs, the NAV increases as well. This results in great returns on your investment, though there is no guarantee of markets, you will still make substantial profits because of the diversity of mutual fund investments.

  • Investment Objectives: You can set realistic and long-term investment goals with these plans. It is a preferred option especially if you are on fixed income.

Get Better Returns with SIP Investment Plans

SIP Investment Plans are not just a way to save money, they’re aimed at wealth growth. The best way to ensure high returns in your investment is, to put your money in the best performing funds. Moreover, by dividing your investment budget, you’re essentially minimising any market risk.

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