Best SIP for Long Term
What makes the best SIP for long-term investments?
- A Systematic Investment Plan is a popular method or strategy for investing in Mutual Funds.
- SIP helps you invest regularly and with disciplined.
- Advantages of SIP long-term SIP investments include Rupee cost averaging and Power of Compounding.
- You can start your SIP investment as small as INR 100.
- Best long-term SIPs help you achieve your investment goals per your risk appetite.
When it comes to Mutual Funds, investors have many options. You can choose from a wide variety of Mutual Funds based on your investment goals and horizons. Moreover, you can choose to invest in lump sums or instalments. The latter is known as the Systematic Investment Plan. Let us find out more about SIPs and the advantages of investing in the best long-term SIPs in this article.
What is the Best SIP for Long Term Investment?
There is no particular characteristic or fixed formula that makes a SIP the best SIP Plan for 5 years, the best SIP Plan for 10 years, etc. While you can research the same on investment websites or seek assistance from investment advisors, there are some fundamental characters that can help you select the best SIPs for long-term investment. These include:
Let us say you find the best SIP plan for 20 years. In such a case, you would be buying Mutual Fund Units over 20 years. In these 20 years, as the price of each unit of the Mutual Fund increases, you would be allotted fewer shares. Consequently, if the per-unit price falls, you would be allocated more fund units. With every SIP, the cost of acquisition is averaged out. This phenomenon is known as Rupee-cost averaging, and its benefits are the highest when you invest in the best SIP for long term.
Power of compounding
When you choose the best SIP for long term investment, you get the option to reinvest your profits instead of redeeming this. This way, you can buy more units by reinvesting your earnings and gradually build your Mutual Fund Portfolio. This benefit is not available with short-term SIP investments or if you decide to redeem your gains. You can only find it with long-term investments.
During the course of your SIP investment, you can gradually increase your SIP amount as your income increases. You can invest in the same SIP for years or choose new SIPs to invest in, per your requirements. With this kind of flexibility, you can stay invested in the Best SIPs for the long term, choosing your preferred investment tenures.
Things to Consider
- If you are looking for the best SIP Plan for 5 years or 10 years, you could invest more in small-cap and mid-cap but less in large-cap funds to gain maximum returns in a short period.
- While shortlisting the best SIP Plan mutual funds for 15 years, 20 years or more, ensure you have a healthy mix of debt, equity, and hybrid funds. Doing this helps with capital appreciation leading to more profitable returns.
With the best SIP plan for the long term, you can continue investing for as long as your like and eventually grow your corpus based on the past market cycles and returns accrued during the investment term. Remember, mutual funds are subjected to market risk so ensure you make informed investment decisions.
The time to invest is now, and you can start your first, or next SIP investment with digibank by DBS.
*Disclaimer: This article is for information only. We recommend you get in touch with your income tax advisor or CA for expert advice.