Best SIP Plan to Invest For Five Years in 2020

A SIP or a Systematic Investment Plan is an investment plan which allows investors to invest in mutual funds in small periodic amounts instead of lump-sum amounts. The frequency of these investments can be weekly, monthly or quarterly. The most significant advantage of SIPs is that it allows your money to grow with the power of compounding, and one can start with an amount as low as Rs. 500.

1. Flexible SIP: This SIP allows you to increase or decrease or even skip paying the SIP amount as per your current financial situation.
2. Top-Up SIP: This SIP allows you or encourages you to invest in a high-performing mutual fund. With this SIP, you can increase your SIP investment amount at regular intervals. Say, for example, in Jan 2020; you are investing Rs. 1000 per month, but you see that the mutual fund is performing well, so you can increase your investment to Rs. 2000 per month in March 2020 or any other month/week/quarter in the future.
3. Perpetual SIP: SIPs generally require investors to provide an end date. But perpetual SIPs allow you to keep making investments till whenever you wish to or when you have reached your financial goal.
4. Trigger SIP: This SIP is ideal only for investors who know how to read and predict the financial market with the utmost accuracy. It allows investors to set start dates, NAVs, or index levels.

1. Start Small: You can start investing in SIPs with as low as Rs. 500 per month. This encourages individuals to save with minimum financial pressure without any worry of committing to a huge lump sum amount.
2. Power of Compounding: An SIP allows you to increase your investment by a fixed amount at regular intervals and earn interest on your returns generated by your investment.
3. Automatic deduction: With SIPs, you need not issue cheques, drafts, or pay explicitly every month for the SIP contribution. You can give your banking institution a one-time instruction to allow automatic SIP deductions.
4. Moderate to low risks: Mutual funds invest in equity and debt funds which carry risks with them. But with SIPs, the number of mutual fund units is changed based on the market conditions. The amount you invest remains the same. When the markets are doing well, the number of units bought is less and vice versa.

Following are the top-performing mutual funds. They are excellent choices for investment in the year 2020: Please note that the monthly investment here has been assumed at Rs. 5000

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.