Investors are constantly in search of funds that will help them earn guaranteed returns. The earnings from high-performance funds help in compensating the losses from other securities. Investors always look for investment options that will provide them with money in case of an emergency. Blue-chip funds are an excellent option for balancing a mutual fund portfolio. It allows investors to plan their portfolios strategically and provide them with sizable earnings. Investing in high-performing mutual funds also protects against potential losses. The right set of best mutual funds to invest in 2020 India can help an investor achieve their financial goals within a short period.
Finding the Best SIP Mutual Funds
Before understanding the concept of SIP it is important to understand mutual funds. A mutual fund is a combination of entities from different sectors. It serves as a pool of investment for individual and institutional investors with similar financial objectives. Mutual funds are categorized into debt fund, equity fund, and balanced hybrid fund based on their exposure to equity.
Mutual fund investment through a SIP scheme is the most suitable option for beginner investors. It helps in developing a financial discipline for the future. Usually, the frequency of SIP schemes varies quarterly, weekly, or monthly based on the convenience of the investor. Millennials prefer to invest in SIP due to its flexibility and convenience. Moreover, investing in best mutual funds for sip 2021 helps in developing a habit of saving a fixed sum of money regularly.
Who Are Suitable For Investing In SIP Mutual Fund Schemes
Mutual fund investments through a SIP scheme are suitable for all types of individuals. SIP Schemes are particularly advisable for first-time investors. It allows them to understand the power of strategic investment and wealth compounding. Investors who are not familiar with equity-linked investment can choose mutual funds to start their investment journey. The best part about SIP schemes is that one does not require having a lump sum of money. Other investment options do not offer such kind flexibility. The following section of this article includes a list of the top 10 mutual funds for sip to invest in 2021.
Is Investing Through a SIP Better Than Lump Sum Investment
Lump-sum investments usually require a substantial amount of time to arrange the money. Besides, investing in lump sum mutual funds is quite similar to bank fixed deposit schemes. Investors looking to make a maximum profit through lump sum investment must have a comprehensive understanding of market dynamics. Below is a list of top SIP mutual funds in India;
- Mirae Asset Emerging Bluechip Fund
- Axis Bluechip Fund
- Kotak Equity Opportunities Fund
- Tata Large & Midcap Fund
- SBI Flexicap Fund
- Edelweiss Large & Midcap Fund
- Canara Robeco Flexi Cap Fund
- UTI Flexi Cap Fund
- Invesco India Largecap Fund
- ICICI Prudential Bluechip Fund
Do not miss below posts –
Benefits of Investing In Top Mutual Funds
Mutual fund investment schemes have a lot of benefits for the investor. Following are some of the notable advantages of investing in SIP schemes.
- Investments in Small Amounts
SIP schemes eliminate the need for lump sum investment. Investors can start their journey with a minimum investment of ₹500. Some mutual fund plans even allow investors to start with ₹100. The investment amount is never a barrier to begin mutual fund investment.
- Rupee Cost Averaging
Mutual fund investments through SIP also provide the advantage of rupee cost averaging. As an investor, you can buy lesser units when the market is high, and purchase more units when the market is going down. Eventually the cost of purchasing securities averages out and aids in earning a sizable profit.
- High Flexibility
SIP schemes provide much-needed flexibility for investors. You can start or stop a SIP scheme at your convenience. Investors with small budgets can opt for pausing ongoing schemes at any point in time without paying any extra charges. It also eliminates the need for timing the market.
- Running Multiple SIPs Simultaneously
You can start and run multiple SIP mutual fund plans simultaneously. It increases your chances of earning a profit from different schemes at a particular time. Always be cautious at the time of selecting the funds.
Tax Advantage of Investing In Mutual Fund Schemes
The taxation rules are the same irrespective of your mutual fund plan. Dividends earned from mutual fund investments are included in the overall income and taxed as per the applicable tax slab.
- Taxation for Debt Funds
Debt funds transactions within a holding period of 3 years are categorized as short-term capital gains. These profits are included with the gross income and taxed according to the appropriate income tax slab. Similarly, long-term profits are earned when the debt fund is redeemed after three years of holding. Profits earned in the process are charged at 20% with indexation benefit.
- Taxation for Equity Funds
Equity fund benefits redeemed within one year are termed as short-term capital gains. The profits earned are taxable at a flat rate of 15%. An investor is entitled to long-term capital gains if the funds are redeemed after a holding period of one year. Profits earned from equity funds after one year are tax exempted. Long-term capital gains are taxed at 10% without any indexation benefits.
If you plan to invest in equity funds for 2 years and then redeem all your securities at once. The profits earned from unit holdings of more than 1-year-old are taxable as a long-term capital gain. The remaining portion of the holding is treated as a short-term capital gain.
- Taxation for Hybrid Funds
Funds with equity exposure of more than 65% are taxed as per equity fund taxation. Mutual fund holdings with lesser equity exposure taxed as per debt fund taxation.
Traditional investment practices mostly encourage plans that offer a fixed return and safety of the capital investment. However, schemes like Bank FD, recurring deposit, post office saving schemes, and others offer steady but small returns. Mutual fund plans do not ensure a fixed return or capital protection but offer higher returns in favorable conditions. SIP mutual fund schemes have emerged as one of the best investment options for new and experienced investors. It serves as a flexible tool for achieving financial objectives through small contributions. As an investor, you must have a strategic approach in the selection of high-performing funds to earn maximum profits.
No Commment to show.