Investment in market is subject to market risk but Investing in Mutual fund SIP is best way to create long term wealth. If you are looking to invest and want to save tax, you can invest in SIPs (Systematic Investment Plan).
What are Mutual Funds?
An Asset Management Company (AMC) gets investments from individuals and institutional investors to buy securities such as bonds and stocks and this system is called the Mutual Fund. The fund managers of the AMCs manage such wide investments. Such fund managers hold excellent track of records of managing portfolios of investments. We can shortly say as the mutual funds shuffle from various investors to invest their funds in stocks, bonds and other similar ways. Mutual funds are widely classified into debt funds, hybrid funds, equity funds and these are based on their amount of equity exposure.
While investing in mutual funds, the investors are given fund units based on their quantum of investment. Based on the Net Asset Value (NAV) only, investors can purchase or redeem their fund units. As the performance of the underlying assets varies, the NAV funds vary daily. Securities and Exchange Board of India (SEBI) has complete control over mutual funds, that’s why it is considered a safe investment, but MFs are subject to market risks. We will read here all about the top mutual funds for investments and related matters.
Top 10 Best Performing SIP Mutual Funds
Systematic Investment Plan i.e. SIP is one among the two ways of mutual fund investments. Investing in a lump sum is another way of investing in MFs. Mutual fund investments thru SIPs might be wobbling at times and small investments are advised periodically.
- Axis Midcap Fund
- Aditya Birla Sun Life Digital India Fund – Growth-Direct Plan
- DSP Midcap Fund
- DSP Healthcare Fund – Direct – Growth
- Edelweiss Banking and PSU Debt Fund – Direct Plan – Growth
- ICICI Prudential Technology Fund
- Kotak Bluechip Fund
- SBI Equity Hybrid & Small Cap Fund
- Tata Digital India Fund Regular Growth
- UTI Flexi Cap Fund Direct-Growth
The above listed are advised to be the top 10 mutual funds for SIP to invest in 2023.
Can I invest in the best mutual fund for SIP?
Investments thru SIPs in mutual funds are recommendable for every individual. Particularly, SIP is advised for the first-time investor. Investing in mutual funds thru SIP will make you understand better the capacity of each fund. If you are a novice to such an equity world of investments. then it is recommended to start with Mutual fund investments thru a SIP.
SIP investments enhance the chances and need to go for a lump sum investment. So, investors can start with small amount of SIPs regularly. Many mutual fund plans allow the investors to invest the lowest as Rs. 100 per month thru a SIP and these investment options cannot be seen in any other options of investment.
Why should I invest in Mutual funds?
It is always good to choose a financial advisor to check out which mutual fund is best for SIP and the market rates before investing. And, definitely, he is the right person to describe all about mutual funds, and the best fund for SIP. Here, we say why to invest in MFs.
Reduced Risk
If you want to know the market fluctuations, regular SIP investments for the long term is required. If an investor finds, the fund is yielding below-average returns, he can exit anytime from the particular MF and make investments in another fund. This activity reduces the risk rate.
Easy and Convenient
The investor has to choose the SIP amount and its frequency. Auto-debits are done by the banks based on the amount and choice of frequency. The investor can track his current fund position easily. Since SIP has the choice of immediate stop when the NAV drops, he can get rid of his worries about the investments made.
Monetary Discipline & Planning
Regular investments in an MF is always a planning phase for investors who lack discipline. SIP has been a blessing to investors who do small amounts of investments regularly. But, remember, your small investment today will reach a huge value in the future. Disciplined and planned savings will make an investor retire peacefully at his age without any chaos about expenses and income after his retirement. Proper planning makes a way for saving. Regular investments are always the best habit and everyone should grow up with the culture. Investing in the top ten SIP will help every individual to raise their wealth status.
SIPs and types
Top-up SIP, Flexible SIP, Perpetual SIP, and Trigger SIP are the four types of SIPs.
Top-up SIP : It helps investors to increase their investments from time to time as their income increases. Step-up SIP is its other name.
Perpetual SIP: When the investor does not denote the end date in the SIP form, then it continues without break. An investor can withdraw his investment whenever he requires it. But, it is recommended to set an end date of the SIP payment to keep up the financial discipline and also to reach his financial goals.
Flexible SIP : An investor can decrease or increase the SIP amount and even he can skip paying the SIP amount while facing monetary issues. The same can be increased when he gets any additional income.
Trigger SIP : This is the best SIP for investors with limited knowledge of trade and security. Investors can set start and end dates, NAV, index levels in this SIP. It might lead to speculations and often discourages the investors. So, an investor or his financial advisor can choose the best mutual fund for SIP and according to his wealth condition, he may choose the right MF and invest in SIP.
Selecting the top-performing mutual funds
While selecting the top-performing MFs, some parameters should be considered before investing.
Fund History
Based on the funds’ history an investor can select a mutual fund. Considering an extended history of Mutual funds is always good. And, an MF is also judged based on how far it performed in the past, especially at the bad phase of the market. You cannot expect such records for newly formed funds. It is necessary to consider a minimum of 5 years of a fund’s history before deciding any investment-prone decision.
Fund manager performance
The success of the fund has a major role with the fund manager because he is handling the investors’ money. He is the only person who can decide on making the profits of investors. If a fund manager is capable of recognizing profitable investments, then the funds will result in good returns. Hence, a good track is important for a fund manager.
Check the expense ratio
While choosing an MF, analyzing the expense ratio is essential. This is nothing but a fee charged by the fund houses to manger investors’ investments. The percentage helps in expressing the fund’s returns that is deducted from the returns of an investor. Otherwise, the take-home returns of an investor are reduced by a higher expense. So, the fund houses cannot exceed their charges then the fixed limits set by the SEBI.
Objective on investment
After assessing life goals only an investor should invest in any scheme. Once an assessment is made. The investor has to map it with the objectives of an MF scheme to check out if the investment in it provides the desired outcomes. Like individual investors, mutual funds also have significant objectives. Investors should gauge whether their objectives sync with their mutual funds before investing.
So, an individual could not conclude the above points, he can discuss with the fund managers or financial advisors about the best mutual funds in India for SIP and can make the investments accordingly.
Investments in various types of mutual funds
Top equity mutual funds, Top small-cap mutual funds, Top large-cap mutual funds, Top tax-saving mutual funds, Top liquid funds, Top balanced mutual funds, Top short-term mutual funds, Top debt mutual funds, Top SIP mutual funds are the various types of mutual funds for investments. While investing in mutual funds, have a brief discussion about the funds and their history and try to search for the top 10 SIP mutual funds to receive the best returns.
What are the advantages of investing in the best mutual funds?
- Mutual funds are the best for small investments at an initial phase. Even investing Rs.100 is possible in MFs.
- Mutual funds automatically widen the portfolio of an investor. Since every mutual fund invests in a broad spectrum of securities, investors get a diversified portfolio.
- If you are looking for saving taxes under Section 80C of the Income Tax Act, 1961, then investing in the tax-saving mutual funds (or) equity-linked saving scheme (ELSS) is the best option. You can get a tax deduction of up to Rs 1,50,000 a year by investing in mutual funds that will help to save up to Rs 46,800 a year in your taxes.
Conclusion
As we discussed briefly the Mutual funds, SIP and investments, investing in MFs might yield a huge sum based on their performance and while thinking of which SIP is best for investment either go for self-study or approach a financial advisor for the best choice.
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