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| December 16, 2021


A Systematic Investment Plan, better known as SIP, is an investment option offered by mutual funds. The SIP investment route is for people who want to invest their money in a disciplined manner. You can invest a fixed amount at regular intervals in the mutual fund scheme of your choice. SIP plans of different mutual funds start at a price as low as Rs. 500 and you can choose to invest on a weekly/monthly/quarterly/semi-annually or an annual basis. Investing in SIP funds is an ideal option for first-time mutual fund investors. This helps them to understand how things work. Over time, they will get to know which ones are top SIP funds. People with a regular source of income can divert a portion of their money towards mutual fund investments. Initiating a SIP also gives a sense of financial discipline as the person has to put aside a fixed amount. Lets dive deeper and discuss:

What is A SIP?

To get high returns on your investments, it is important that you start investing early and go for long-term ones. This is what SIP plans are for. SIPs are becoming a popular option among mutual fund investors as they do not have to worry about market volatility and think about whether the market is going up or down. SIP Investment is similar to a recurring deposit as you do not have to invest a lump sum amount. You can start with an amount of your choice and choose the fixed interval also. When you make an online SIP investment, a fixed amount gets deducted from your bank account at the predefined interval and gets invested in your preferred mutual fund.

Benefits of SIP Investment

Investing in SIP Plans allows you to get started with a small amount. You can spread your investment over time and get significant returns. Some other benefits of SIP Investment are:

  • Convenience: As the name implies, SIP is a disciplined manner of making investments. You do not have to get involved in the guessing games of market trends. The only research you have to do at the time of starting the SIP plans is you have to figure out which is the best SIP to invest now and you are sorted! If you spend a little time on the internet, you will find a list of top SIP funds. You can compare those SIP funds and pick the one you want to invest in. If you go for online SIP investment, things can get more convenient.

  • Power of Compounding: When you use a systematic approach to invest a small amount regularly for long periods, you can unleash the power of compounding. If you keep investing for a longer period, it results in greater returns.

  • Rupee Cost Averaging: When you invest in SIP funds, your average purchase cost is evened out in the long run. You are making your investment at a fixed interval; if the market goes up, you get fewer units and if the market goes down, you will end up getting more units. This minimizes risk for you and you can escape market volatility.

  • Higher Returns: If calculated, you will realize that SIP plans provide higher returns as compared to traditional investment options like bank FDs, PPF etc. The only difficult part is to understand which is the best SIP plan to invest in. While making the decision, you can also take the help of lists including the best SIP plans in 2021. These lists are easily available on the internet.

  • Lower Level of Risk: Since you put only small amounts of money while investing in SIP the risk gets minimized. There are fewer chances of you losing the invested money.

  • Flexibility: SIP is a flexible investment option as you are allowed to increase or decrease the amount you are putting in. Investors also have the option of exiting the plan whenever they want to. This freedom encourages investors to put their money in mutual funds.

How to Find the Best SIP Plan to Invest?

To pick the best plan, you can compare multiple SIP funds on the basis of returns they would bring. There are a few things you need to keep in mind while choosing a SIP plan:

  • The mutual fund you are planning to invest in should have been in the market for a few years.

  • Always go for a mutual fund that is operated by your bank. Your relationship manager can confirm this for you.

  • Invest in a reliable mutual fund. Pick the one that keeps a good amount of funds as the corpus.

  • Spend a little time researching and try to avoid plans with risks like volatility and low liquidity.

  • Always prefer plans with good rankings.

Initiating a SIP is a great way to start your investment journey. You can get higher returns if you set realistic goals. If you are investing in mutual funds for the first time, this is the best option you have to get familiar with the process.

Wondering which is the best SIP to invest in now? Visit your nearest Muthoot Finance branch where you get access to a variety of mutual fund SIP schemes and investment experts that help you pick the right scheme(s) as per your financial goals.

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