sanjaybyadav
Introduction
In the era of today’s financial planning, Systematic Investment Plans or SIPs have become extremely popular. But if one has small savings and is willing to invest a below rupees 1000 amount for the month, then this guide will help you choose the best SIP options for you. Here, we are going to provide you with some mutual funds and SIPs which are among the best for beginner investors.
Sanjay yadav
Mutual Funds What is SIP and Why Invest in It?
The systematic investment plan is that method of investment through which one can invest small and small amounts of money in mutual funds. Through this SIP, anybody can invest a fixed amount, for example, ₹ 500, ₹1000 in mutual funds every month, whether one has a large amount of capital or not. SIPs are quite disciplined and flexible in the mode of investing in mutual funds, in which one would be able to invest according to his financial goals and budget.
Benefits of Starting a SIP Under 1000
Mutual Funds Choosing the right SIP (Systematic Investment Plan) requires careful consideration of your financial goals, risk tolerance, and investment horizon. Here’s a guide on how to select the most suitable SIP for your needs:
Define Your Financial Goals
- Define for what purpose you are investing? Is it for a short-term goal-probably a vacation or for a long term goal like retirement?
- In short-term goals, opt for lesser volatile funds-these can be in the form of debt or balanced funds that would provide stable returns
- In long-term goals, equity-focused SIPs are better as they tend to offer high returns over the long term although a lot of market volatility could occur.
Assess Your Risk Tolerance
- Your risk tolerance refers to how comfortable you are with the ups and downs in the market.
- Low-risk investors would opt for debt funds or large-cap equity funds because they are not as volatile.
- Balanced funds or multi-cap funds may fall in the moderate risk category since they distribute risk across different levels of company size.
- High-risk investors may find the small-cap or sectoral funds opportunity to be viable since these funds have the upside of better returns but also the downside of higher volatility.
Best Mutual Funds SIP Under 1000 in 2024 Equity-Oriented Funds
- Nippon India Small Cap Fund
- Mirae Asset Emerging Bluechip Fund
- Invests in large-cap and mid-cap companies.
- Suitable for investors seeking aggressive growth.
- Expense Ratio: 0.67%ET Money.
- Kotak Small Cap Fund
- Targets small-cap stocks for long-term capital appreciation.
- Expense Ratio: 0.43%TickertapeGroww.
Hybrid Funds
- ICICI Prudential Equity & Debt Fund
- A mix of equity and fixed income for balanced returns.
- Suitable for moderate risk-takersGroww.
- HDFC Balanced Advantage Fund
- Dynamically allocates between equity and debt.
- Helps manage market volatility effectivelyET MoneyTickertape.
Other Options
- Quant Focused Fund
- Canara Robeco Emerging Equities Fund
- Invests in emerging mid-cap and large-cap stocks.
- Provides long-term growth opportunitiesET Money.
- Edelweiss Mid Cap Fund
- Focuses on mid-cap companies with strong growth potential.
- Suitable for medium-to-high-risk investors.
- Expense Ratio: 0.43%TickertapeGroww.
- SBI Contra Fund
- ICICI Prudential Retirement Fund – Aggressive Plan
- A hybrid fund designed for retirement planning with equity dominance.
- Balances risk with potential long-term returns.
- Expense Ratio: Competitive in its categoryGroww.
Frequently Asked Questions (FAQ) of Mutual Funds
What are the key differences between SIP and lump sum investment?
You invest small amounts of money at regular periodic intervals in SIP. In the case of a lump sum investment, you invest huge amounts of money all at one go. SIPs not only help control the volatility of the market but are also best suitable for first time investors.
Is it possible to start SIP with low amounts(₹500 – ₹1000)?
Yes, you can start with a SIP with Rs.100/- Most mutual fund houses have had a minimum SIP amount of ₹500/₹1000 that makes it affordable and convenient for beginners and small-income earners.
When and how do I get my returns from a SIP?
It is basically SIP returns that are a function of the performance of mutual fund. You are free to withdraw your investment at your wish (subject to lock-in period, if any). Returns come based on the amount one invested and the scheme’s performance.
What is “Rupee Cost Averaging” in SIP?
Rupee cost averaging is a technique in SIP in which you invest at regular intervals irrespective of the market price. This helps you reduce your average cost of investing in mutual fund units, because there are times when you buy more units when prices are low, and lesser numbers of units when prices are high.
Can I stop or pause my SIP?
Yes you can stop or even put your SIP on hold anytime. SIPs are flexible and changeable according to financial conditions. Even in case of decrease in income, you can even increase or temporarily pause investment amount.
Is SIP useful for tax-saving?
Yes, you can save tax by making investment in SIP in ELSS funds. ELSS funds are equity-linked savings scheme mutual funds. Under this, as an investor you can claim deduction up to ₹1.5 lakh under Section 80C of the Income Tax Act.
What is the minimum tenure of a SIP?
It all depends on your financial objectives. Generally, it is advisable that the tenure be in the range of five to ten years or more. This is because on the grounds of better returns, compounding takes place and the risk decreases with time.
How to choose the best mutual funds for SIP?
Past performance of a fund, Risk level it has, Experience of the fund manager, and your financial goals must be considered while selecting a mutual fund. It may be advisable to take an opinion of a financial advisor or browsing on some reliable financial websites.
SIP Is Available for Equity Mutual Funds Only.
This SIP is available in equity funds, along with debt funds, hybrid funds, and also in a balanced fund. There are different risk and return profiles for each of these fund types, so you can choose according to your goals and risk tolerance.
What happens if I miss a SIP payment?
Missed SIP payment generally does not call for any penal action. If there is a zero balance in the account due date, then the SIP for that month gets failed. However, if the payments are repeatedly missed, then the SIP might also get cancelled by the fund house. Suggest maintaining sufficient balance or rescheduling of SIP date to avoid these interruptions.
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