What makes the best SIP for long-term investments?
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.
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.
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.
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. Also, open your savings account with us.
*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.