Last Updated on April 7, 2026 by teamtfl
A few years ago, a CTO earning Rs 45 lakh a year sat across from me and said, “Hemant, my SIP returns are negative. Should I stop my SIP investment?”
I asked him one question: “Which mutual fund are you invested in?”
He blinked. “SIP. I’m invested in SIP.”
That moment told me everything. One of the sharpest minds in his company — a man who managed 200-person engineering teams — genuinely believed SIP was a product you could buy. Not a method. Not a way of investing. A product.
He isn’t alone. After 25 years of advising senior executives, I can tell you: the SIP confusion runs deeper than most people realise. And the mutual fund industry’s marketing hasn’t helped.
So let me say this clearly: SIP is not an investment. It is a way of investing. The same way an EMI is not a house — it’s a way of paying for a house.
⚡ Quick Answer
SIP (Systematic Investment Plan) is a method of investing a fixed amount regularly — not an investment product itself. You can do a SIP in mutual funds, NPS, even gold. India now has 10.45 crore SIP accounts investing Rs 29,845 crore every month (Feb 2026). Most myths around SIP stem from confusing the method with the product. This post busts 11 of the most common ones.
SIP in India — 2026 Snapshot
| Metric | Data (Feb 2026) |
|---|---|
| Monthly SIP Inflow | Rs 29,845 crore (up 15% YoY) |
| Active SIP Accounts | 10.45 crore |
| SIP AUM | Rs 16.64 lakh crore |
| Minimum SIP Amount | Rs 100 (at most AMCs) |
| SEBI Regulations | New SEBI (Mutual Funds) Regulations 2026 — replacing 1996 rules |
Source: AMFI India, SEBI
11 SIP Myths — Exposed
MYTH 1 SIP in Direct Stocks is a Smart Strategy
This is one of the most dangerous myths out there. Apps now let you set up “stock SIPs” with one tap, and people think they’re doing what mutual fund SIP investors do. They’re not.
When you buy a stock, you’re making a bet on one company. If that company’s fundamentals deteriorate — and you keep buying through a SIP — you’re not averaging down. You’re throwing good money after bad.
SIP works because it averages across a portfolio of 40-80 stocks, managed by a professional who exits bad positions. A stock SIP has no such safety net. Remember Jaiprakash Associates? It was a Sensex stock till 2012. Investors running “SIPs” in it watched their money disappear.
| Former Index Stock | What Happened |
|---|---|
| Zenith Ltd (Sensex: 1982–1992) | Delisted. Value zero. |
| Hindustan Motors | Once made the Ambassador. Now penny stock. |
| MTNL | Government telecom giant. 95%+ value eroded. |
| Jaiprakash Associates | Exited Sensex 2012. Under NCLT proceedings. |
“In the business world, the rear-view mirror is always clearer than the windshield.” — Warren Buffett
SIP in a diversified mutual fund? Smart. SIP in a single stock? That’s speculation dressed up as discipline.
MYTH 2 SIP is Only for Small Investors
I’ll never forget this conversation. An HNI client, someone managing a Rs 15 crore portfolio, was grinning while I explained SIP to him. Finally he said, “Hemant, do mutual funds even allow SIP of Rs 5 lakh per month?”
Yes. Absolutely yes.
The mutual fund industry’s marketing has boxed SIP into a “Rs 500 per month” starter kit. That’s a tragedy. SIP is a concept, not an amount. Whether you invest Rs 500 or Rs 5 lakh, the principle is identical — you’re removing the timing decision from your investment process.
The returns you earn are in percentages. They don’t care whether your SIP is Rs 1,000 or Rs 10 lakh. I’ve set up SIPs of Rs 25 lakh per month for senior executives. It works the same way. The only difference? The zeros on the wealth created at the end.
MYTH 3 SIP is a Fund or a Scheme
When I was working at HDFC Mutual Fund years ago, investors would call and ask: “What’s the NAV of HDFC Top 200 SIP Fund?”
There is no such thing as a “SIP Fund.” SIP is a vehicle — a way of investing. Like an EMI is a way of repaying a loan. You wouldn’t call your home loan an “EMI house,” would you?
Almost all open-ended types of mutual funds — equity, debt, hybrid — offer a SIP option. You can also do a SIP-like investment in NPS, PPF (monthly deposits), and even gold savings schemes. The moment you invest a fixed amount at a fixed interval — that’s a SIP.
PRO TIP Where Can You Do a SIP?
Mutual funds (equity, debt, hybrid), NPS, gold ETFs, PPF (monthly deposit), ULIP premiums, and even recurring deposits. SIP is not limited to mutual funds alone.
MYTH 4 Start SIP When Markets Are High, Stop When They’re Low
If you know when markets will be high or low, why are you doing a SIP in the first place?
The whole point of a SIP is to remove the timing decision. You invest the same amount every month. When markets fall, you get more units. When markets rise, your existing units grow. Over time, this averaging — called rupee cost averaging — works in your favour. But only if you stay invested through both sunshine and storms.
I’ve seen this pattern repeat for 25 years. Markets fall 20%. Clients panic and stop SIPs. Markets recover 40%. Clients restart SIPs — at higher NAVs. They buy high, sell low, and then blame SIP for poor returns.
SIP works when you give it time — whether the weather is smooth, breezy, or cyclonic. That’s not just a line. That’s what separates the investors who build wealth from those who don’t.
MYTH 5 I Can Withdraw All My ELSS Money After 3 Years of SIP
This trips up even experienced investors. Yes, ELSS has a 3-year lock-in. But each SIP installment is a separate purchase — and each one is locked for 3 years from its own investment date.
So if you run a SIP for 3 years, your first instalment unlocks after 3 years. Your last instalment? It unlocks after 6 years. The lock-in follows FIFO (First In, First Out).
| SIP Month | Invested | Unlocks |
|---|---|---|
| Jan 2024 (Month 1) | Rs 10,000 | Jan 2027 |
| Jun 2024 (Month 6) | Rs 10,000 | Jun 2027 |
| Dec 2024 (Month 12) | Rs 10,000 | Dec 2027 |
| Dec 2026 (Month 36) | Rs 10,000 | Dec 2029 |
Plan your tax-saving SIPs accordingly. If you need the money at a specific date, a lumpsum in ELSS gives you a cleaner exit timeline.
Confused about SIPs, lumpsum, or which fund to pick?
A structured financial plan removes the guesswork from your investment decisions.
MYTH 6 SIP is a Magical Formula That Always Works
SIP is powerful. But it’s not magic.
No investing strategy — not SIP, not lumpsum, not value investing — is immune to prolonged market downturns. If you start a SIP and the market keeps falling for 2-3 years, your investment will show a loss. That’s just maths.
What SIP does is reduce the damage. By buying at different price points, you avoid the catastrophe of putting all your money in at the peak. But the choice of fund matters enormously. A SIP in a poorly managed fund will still give you poor returns. A SIP in a sectoral fund when that sector is in a multi-year downturn will test your patience beyond reason.
SIP removes the timing risk. It doesn’t remove the fund selection risk. That’s where a good advisor earns their fee.
MYTH 7 SIP Always Gives Better Returns Than Lumpsum
This one surprises people. In a consistently rising market, lumpsum will almost always outperform SIP. Why? Because the lumpsum money is fully deployed from day one. SIP money trickles in — and the later installments miss the earlier gains.
Over the long run, in a growing economy like India, studies show lumpsum investing outperforms SIP roughly 65-70% of the time.
Then why do SIP at all? Because it solves a different problem. Most people don’t have Rs 10 lakh sitting idle to invest. They earn monthly, and investing monthly makes sense. More importantly, SIP removes the emotional burden of timing. “Should I invest now? What if markets crash next week?” — SIP silences that voice.
“Don’t compare SIP vs lumpsum returns. Compare SIP vs not investing at all. That’s the real comparison for most people.”
MYTH 8 There is a Right Time to Start a SIP
It’s time in the market, not timing the market.
I hear this question at least once a week: “Markets seem high right now. Should I wait for a correction before starting my SIP?” The irony is beautiful. The whole point of SIP is that you don’t need to decide whether markets are high or low. You invest every month regardless.
A client of mine — Priya (name changed) — kept waiting for “the right dip” to start her SIP back in 2019. The Sensex was at 40,000 and she thought it was too high. She waited through COVID. She waited through the recovery. She finally started in 2023 — when the Sensex was at 65,000. She lost four years of compounding waiting for a dip that would have been irrelevant over a 15-year SIP horizon.
If you wait for the “right time,” you will wait forever. Every month looks like the wrong month for one reason or another. The best time to start a SIP was 10 years ago. The second-best time is today.
MYTH 9 Missing a SIP Date is a Disaster
It’s not. Relax.
If your bank account doesn’t have sufficient balance on the SIP date, that month’s instalment simply gets skipped. The AMC doesn’t penalise you. Your SIP continues from the next month as scheduled.
I once had a client — Arvind (name changed) — who panicked because he was travelling abroad and his salary got delayed by 3 days. He was worried the “missed SIP” would somehow reset his returns. It doesn’t work that way. One missed instalment in a 15-year SIP journey is like skipping one gym session in a year. It won’t ruin your fitness.
However — and this is important — if you miss 3 consecutive SIP dates, most AMCs will cancel your SIP mandate. You’ll need to set up a new one. So an occasional miss is fine. Three in a row? That’s a problem you should fix.
⚠️ Watch Out
Your bank may charge a bounce fee (Rs 150-500) if the SIP auto-debit fails due to insufficient balance. The AMC won’t charge you, but your bank will. Set up a salary account auto-transfer to avoid this.
MYTH 10 I Need a Separate Account for SIP and Lumpsum in the Same Fund
No. Absolutely not.
Your SIP and lumpsum investments in the same fund sit in the same folio. You can have a running SIP of Rs 10,000 per month in a fund and also invest Rs 2 lakh lumpsum into the same fund whenever you want. No separate account needed. No separate folio needed. It all adds up in the same place.
Think of it like your savings account. Your salary comes in monthly (that’s your SIP). You also deposit a Diwali bonus once a year (that’s your lumpsum). Both go into the same account. Same principle with mutual funds.
In fact, this is a smart strategy. Run your regular SIP for discipline, and top it up with lumpsum investments during market corrections or when you get bonuses. Your financial goals will thank you.
MYTH 11 SIP Date Matters for Returns
Every few months, someone shares a “study” claiming that the 7th of the month gives better SIP returns than the 1st, or that the 15th outperforms the 25th.
I ran the numbers once for a client who was obsessing over this. We compared SIPs on the 1st, 10th, and 25th of each month in the same fund over 10 years. The difference? Less than 0.15% annually. He had spent more time researching the “best SIP date” than he’d spent choosing the fund itself.
Over any meaningful period — say 10 years — the difference in returns between SIP dates is negligible. Your choice of fund matters 100x more than your choice of date.
Pick a date that’s convenient. Ideally 2-3 days after your salary credit date, so the money is always there. That’s the only rule worth following.
How to Start a SIP — 3 Simple Steps
If you’ve read this far and don’t have a SIP running yet, here’s how to start one today:
Step 1: Decide the Amount
Use the 50-30-20 rule — invest at least 20% of your take-home income. If you earn Rs 1 lakh per month, start with Rs 20,000. You can always increase later.
Step 2: Choose the Fund (Not the SIP Date)
Pick a diversified equity fund for long-term goals (7+ years) or a hybrid fund for medium-term goals (3-5 years). If you’re unsure, a Flexi Cap or Large Cap index fund is a solid starting point.
Step 3: Set It Up and Forget It
Register through your AMC’s website, a platform like MFCentral, or through your advisor. Link your bank account, choose a date 2-3 days after salary day, and let it run. Review once a year — not once a week.
What Changed in 2026 — SEBI’s New Rules
SEBI has introduced entirely new Mutual Fund Regulations in 2026 — the first overhaul since 1996. Key changes that affect SIP investors:
| Change | What It Means for You |
|---|---|
| New Life Cycle Funds | Goal-based funds (5-30 year maturity) that automatically shift from equity to debt as you approach your goal. Great for SIP investors with a specific target date. |
| Solution-Oriented Schemes Discontinued | Children’s funds and retirement funds are being merged into other schemes. If you have SIPs in these, they’ll be redirected. |
| Lower Expense Ratios | Brokerage costs cut in half. More of your SIP money actually works for you. |
| Revised Fund Categories | Multi Cap, Flexi Cap, and other categories refined. Check if your SIP fund’s mandate has changed. |
These are significant changes. If you haven’t reviewed your SIP portfolio after SEBI’s 2026 regulations, now is the time. Don’t just start SIPs and forget them forever — review annually.
Not sure if your SIPs are aligned with SEBI’s 2026 changes?
A portfolio review can ensure your investments are in the right funds, right categories, and right allocation for your goals.
SIP didn’t make India a nation of investors. Discipline did. SIP is just the vehicle that makes discipline easy.
Don’t worship the vehicle. Worship the journey.
💬 Your Turn
Which of these 11 myths did you believe was true before reading this? And honestly — has anyone ever tried to sell you a “SIP Fund”? Share your story in the comments.
Sir I am investing Rs 12,000 through sip in sbi bluechip, ICICI top 100, kotak select focus fund, SBI magnum equity, sbi magnum Midcap, DSP BR small and Midcap each Rs. 2000 (regular and growth). Are those good funds and how much expected value can I get in 7 years. My overall invested amount will be Rs.10,08,000.
Hi Rohit,
Funds are good but your question about 7 years is wrong.. it can be double or it can be half.
Many says that invest different sip in same date and same sip in different date does it matter .
Nope.. keep it simple
Sir,
Kindly tell me that is the SIP plans have guaranteed rturns Or safety? It can be the best plane for a medium incom people!?
Sir,I would like to know is it sensible to invest in Sip of State Bank of India.I am a hosewife.Will be greatful if you can advice.
I am investing through SIP on regular basis and are increasing my investing amount through different SIP. I have a long term wealth creation plan of 25 – 30 years. I have started this before 5 years and has given decent return.
Is my working and planning good and would be successful in reaching my financial goal after 25 – 30 years. Please give your suggestion.
IDFC SEF is giving only 3-4% returns till date, for last two years, I have completed the tenure of two year lock in period, should I quit and invest in FD which is around 10% ?
Hi sir I want to invest monthly .so I should go through mutual funds sip or term plan .I want to invest monthly 5000 for 15years.please guide me briefly
Thanx
Hi Hemant, nice article…
I have a SIP with no locking period started 2 yrs back. I want to withdraw it now.
Can you please tel me step by step of how to do it?
Thanks.
Dear Hemant,
Greetings !!!
My name is Kapil, I’m married & my age is 30.
I’m having one ULIP with Rs.12K premium PA. I’m looking to invest in Canara Robecco Eq tax saver & Birla Sunlife with Rs.25K each PA considering tax saving/good returns for a period of 10 years.
I’m also looking to invest as a SIP in HDFC Top 200 fund, DSP Blackrock small & mid cap fund, Birla frontline Eq fund & in HDFC Gold fund with Rs.1K per month considering good returns for a period of 20 years.
Request you to kindly advide me on the above mentioned funds so that I could get a clear visibility of the same.
Awaiting your favourable reply.
Thanks & Regards,
Kapil Kamath
hi!
I am an avid reader of your website. I have been investing through SiP in ICICI Pru Focssed equity, DSP blackrock top 100, hdfc top 200 (recently stopped) uti opportunities equity fund, hdfc prudence apart from canara robeco tax saver. I am 69. With no specific goals or cash requirements in near future.
now the sensex is above 20000. I am thinking of stoppings SIPs temporarily(except in ELSS) till Sensex falls below 19000. this way I will have more cash to invest when sensex is reasonably priced.
Dear Hemant,
Your blog is truly a goldmine for information related to financial investments and planning.
I am planning for my future and would therefore like to make certain investments. I am currently studying different options like MF, FD, Property, etc and deciding on the fund allocation in each one of them percentage wise.
As of now, I would like to invest Rs 10000 per month via SIP into mutual funds. I will diversify into a couple of different funds. I am into business and due to the nature of business, sometimes there is a fund shortage and sometimes fund surplus in my hand.
Currently I want to lock in Rs 30 lacs for automated payment of SIP’s for a 25 year period (Rs.10000 x 12 months x 25 years). This way I will not have to worry about missing out on any payment schedules. Also, I would not use this fund for any other purpose, like emergency fund, etc.
I do not want to invest any lump sum, but only Rs 10000 per month in the MF’s. Is there any way I could invest those 30 Lacs, so that every month Rs 10,000 is invested in the Mutual Fund SIP. And that parked money should also earn me interest.
I was thinking of something like:
1. Keep a balance of Rs 1,20,000 in a saving account to pay towards the monthly SIP via ECS for the 1st year.
2. Create 24 Fixed Deposits of Rs 1,20,000 each such that every year one of them matures and I can transfer that amount to savings account and follow step no 1.
This way I will also earn a good interest on my FD’s as well as higher interest % on mutual fund investments.
Does this sound good from wealth creation as well as taxation angle? Is there a better idea?
Hi,
I want to submit tax proofs for FY:March2012-March2013, so I am thinking to invest lumpsum amount(50,000/-) in jan-2013 for ELSS and after that I want to consider SIP.Let me know some good equity funds to invest in.
Is it good to invest in this way?If not,please suggest me any alternative tax savings investment.
Please give your valuable suggestions.
Hi,
I want to submit tax proofs for FY:March2012-March2013, so I am thinking to invest lumpsum amount(50,000/-) in jan-2013 and after that I want to consider SIP.
Is it good to invest in this way?If not,please suggest me any alternative tax savings investment.
Please give your valuable suggestions.
nice article.
keep it up.
Hi Hemanth,
I would like to do a lumsum investment (around 5 lakhs) for duration of 10 years. I am expecting a return of around 20% – 25 % ( i know there is no guarantee, it all depends on market) on this investment. Could you please suggest some funds in which I can invest
Thanks
Narasimha Rao
Dear Hemant
Would like to congratulate you for your website. Your writings have helped me start my savings. I have started investing in mutual funds through SIP and have also opened a PPF account now. I am investing in following two funds for now:
1) Canara Robeco Equity Tax Saver (G) – 1500/- pm
2) SBI Magnum Emerging Businesses Fund (G)- 1500/- pm
also considering to invest in HDFC Balanced Fund (G) – 1500/- pm
I am 26 yrs old and expect around 11-12% annualized returns on my investments with a horizon of 5 yrs. Kindly suggest on the quality of funds chosen by me and will these funds fulfill my expectations. I want to add 1-2 more MFs in my portfolio, kindly suggest some. Thank you in advance.
Dear Hitesh,
Any investment planning hinges on your risk tolerance and the time horizon of goals. The longer you plan the more you achieve withing your limited resources.
At your age you are best placed to do it.
Any investment portfolio should comprise of core – which gives you consistency with minimizing risk and sattelite- which enhances its efficiency. You can learn more about here-
https://www.retirewise.in/2011/12/core-satellite-fund-portfolio-investment-approach.html
Dear experts,
I invested Rs 5000/- thru SIPs in Nov 2010 in the following MFs :-
HDFC Equity (G) : 2000/-
Reliance Equity Opportunities (G) : 2000/-
BSL Midcap Fund Plan A (G) : 1000/-
Thereafter, I started few more funds and closed my BSL SIP, due to under-performance as under in Feb 2012 :-
Franklin India Bluechip (G) : 2000/-
Fidelity Equity (G) : 1000/-
UTI Equity (G) : 2000/-
Canara Robeco Equity Diversified (G) : 1000/-
So, totally i invest Rs 10000/- as on date in MF thru SIPs. Now my queries are as under :-
I have a long term plan of investment, atleast 20-25 yrs. Is my portfolio fine for this duration?
If any changes are required, pl suggest !
My HDFC Equity and Reliance Equity Opportunities SIPs will expire in Nov 2015. So shall I continue with further investments thru SIP mode for the next 20-25 yrs? Selection of funds will be done then, not now I am certain !
Lastly, I intend to invest another 3000/- thru SIP mode with immediate effect. But I am confused whether I should invest in Dividend Yield funds like Tata or ING to bring some stability in my portfolio OR Shd I begin to invest in Equity like UTI Opportunities (G) or maybe more riskier Sector funds like SBI Magnum FMCG (G) ?
Your reply shall be eagerly awaited. Hope You will help me like many others ! Thank you 🙂
Dear sir,
I have already started few sips a few months back. But i feel inconvenience in managing those funds. Can I have a free portfolio manager( like money control) etc where the SIPs will be periodically updated based on the dates i give…
Hi Siva,
Yes, you can create your SIP portfolio at websites like moneycontrol,valueresearch, morningstar etc. to track.
Sir, Thanks for the excellent article. At the same time im shocked to read that we cannot withdraw entire amount from SIP. I have a SIP each in FIDELITY TAX SAVER FUND and HDFC TOP 200 fund running in 30th month now. Can i redeem the entire amount now? Is it possible only after 6 years as you have mentioned in your article?
In tax saver funds lock in period of three years is there but there is no restriction in other funds.
Dear Sir,
Kinldly review my portfolio and suggest wether I am on right track or I need to change my portfolio. I am a long term invester.
HDFC Mutual fund (tax saver growth) -Monthly SIP-Rs 1000
SBI – Magnum TaxGain Scheme -Monthly SIP-Rs 1000
ICICI Prudential Focused Bluechip Equity -Monthly SIP-Rs 5000
UTI Opportunities -Monthly SIP-Rs 5000
HDFC TOP 200 -Monthly SIP-Rs 3000
IDFC Premier Equity -Monthly SIP-Rs 3000
Regds
Vikram
Replied.
Dear Sir,
Kinldy review my portfolio and suggest wether I am on right track or I need to change my portfolio. Please suggest the changes. My investments are are 15 yrs.
HDFC Mutual fund (tax saver growth) -Monthly SIP-Rs 1000
SBI – Magnum TaxGain Scheme -Monthly SIP-Rs 1000
ICICI Prudential Focused Bluechip Equity Monthly SIP-Rs 5000
UTI Opportunities Monthly SIP-Rs 5000
HDFC TOP 200 Monthly SIP-Rs 3000
IDFC Premier Equity Monthly SIP-Rs 3000
Keep tracking the performance of your portfolio.
Hi,
I have been investing in SIPs for some 4-5 years now. I was saving this for buying house. Now that i have finalized a property to be bought, i would want to withdraw money from non-tax-saving SIPs.
a) Can i get all my money in one go for non-locking MFs?
b) How much time it would take for me to get it? I applied for cancellation/stopping of few SIPs some 20 days back.
Hi Praveen,
Its not at all compulsory that first you have to stop SIP & then only you will get the redemption. If you want you can immediately give the redemption request – you will get redemption amount in 3-4 working days.
Thank you Sir, for your prompt reply. One thing I forgot to mention
is that my mutual fund agent who earlier made me buy lots of
NFOs got angry upon hearing my SIP choices. He refused to do any
more business with me. Dont you think that steps should be taken to
prevent misselling and that commission system should be abolished
altogether. Remuneration as a percentage of AUM should be made
cumpulsory. Would love to hear Mr Beniwal’s comment on this, apart
from you Mr Kapila.
I agree with you.
Hi to everybody at tfl.
I started reading your blog 2 months ago and it completely
changed my financial outlook. Since then I have sarted PPF
and in process of surrendering my endowment plans. plan to
take term insurance shortly. Have shared tour site with all my friends.
I have also started SIP since last month as follows:
HDFC Balanced: 5000 pm
DSPBR Top 100: 3000 pm
HDFC Top 200 : 3000 pm
UTI Opportunity: 3000 pm
ICICI Pru Discovery: 3000 pm
SBI Emerging Business: 3000 pm
I am 35 years old, risk profile is average.
Willing too remain invested for around 20 years.
Please comment.
Thanks in anticipation.
Dr K Das
Keep tracking the performance of funds in your portfolio.
Hi
My age is 31 years. I am married and i have a 3 years daughter.
My investments
Jeevan Anand 43000/- premium yearly
PPF Rs.500/- every month
Want to invest in Mutual Funds? Can you suggest
You can start with a balanced fund like HDFC Balanced.
Sir, I am middle class salaried person & want to invest 24,000/ per year (2000/- p.m.) for best return kindly suggest in which SIP I have to invest.
You can start SIP in a balanced fund.
Anil Kumar Sir, Thanks for guidance.
I have started SIP since Jul 2012 as follows:
HDFC Balanced: 2000 pm
HDFC Mid Cap: 1000 pm
UTI Pension Plant: 1000 pm
Dear Hemant,
I am 32 year old salaried person and want to invest Rs.1500 per monthly. I have taken already a policy of LIC NEW JIVAN BIMA GOLD. What would be your sugession. Please sugest in which fund or policy should I invest? I also heared about Postal Life Insurence. Will you arrenge a portfolio for me please? What can be expected after 18 years to invest this amount(1500/-)? Please provide your sugession for novice guys like me. Thanks.
Hoping for your reply…..
Invest in a good balanced fund.
But, may you suggest me some good plans for me. Tell me about balanced fund more. I am very new to financial area. Thank you for quock reply……
Hello hemant how ru….. im amazed to see people like u who is spreading and literating people regarding there investment, really nice to see. Each n every post is very informative. Im new to financial world. I started investing in HDFC Growth fund (Mutual fund) 60,000rs every year+ 1000 rs SIP in . Please tell me about the investemnt i made is good or bad. Should i continue with this.
Also from now onwards i want to invest in safe side. Please tell me the options
There is no safe investment. All investments involve some risk.
Good article.
But is there any plan in sip where in i can just deposit a variable amount whenever i have some, just like a bank savings account.
Usually all sip’s have a fixed amount to be paid regularly.
Hi Rajesh,
You can do the initial investment & then you are allowed to make additional purchase.
HI Hemant
I have decided my 15K MF SIP portfolio in following manner. Can you please suggest if from your opinion it is good to go for next 15 years of horizon? I want to continue this investment for next 15 years without any break and will be very happy I can manage to takeout 12% of return out of it.
If you suggest any changes I will do it immediately.
Large cap equity funds
ICICI Pru Focused Blue Chip Equity-Ret(G)- 2K
Large & Mid cap equity funds
UTI Opportunities(G)-2K
Mid and Small cap funds
HDFC MidCap Opportunities (G)-2K
IDFC Premier Equity Plan-2K
Balanced Funds
Reliance regular saving balanced-2K
HDFC Childerns gift Fund-Investment-2K
HDFC Prudence Fund-1K
Gold MF
Reliance Gold Fund-2K
Thanks
Tushar
You are doing fine.
Hi Hemant,
Nice article on SIP. Equally nice are clarifications.
I also hear about systematic withdrawal plans (SWPs) of Mutual funds.
Is SWP better way to redeem than lumpsum withdrawal? Under what circumstances do they give better rate of return? (Assume there is no compulsion to withdraw in lump.)
Kindly advise
PRaja
Hi, Hemant.
My SIP of 1500 Rs. in HDFC Growth came to an end last month. I was wondering in what scheme should I invest in SIP now ? I have about Rs. 3000 pm at my disposal. I have already a SIP of Rs. 2000 in IDFC Premier Equity. Pls guide.
Shambhavi
It is not correct to invest in too many funds of the same fund house. Diversify across fund houses and types of funds.
Sir,
Can you please suggest few funds for me to invest through SIP for next 15 years.
I have planned to invest atlest Rs. 15000/- per month for 4-5 well performing funds through SIP.
Will be grateful, if you can help suggesting few good funds to build up good pertfolio for SIP.
Regds
Vikram
Hi Vikram
You can consider these funds.
ICICI Prudential Focused Bluechip Equity
UTI Opportunities
Quantum Long Term Equity
IDFC Premier Equity
Hello Hemanth and Anil,
Excellent article and great suggessions. I am not a good investor and everytime I explored into the stock market, got burnt (in the US). So, try to stay away from it, as much as possible. I am an NRI residing in India and can’t invest in govt tax savings vehicles like PF.
I am 48 years old with decent saving. All my current savings are in the form of FD’s or with LIC policies, with zero or very low risk. I can invest upto 2 Lakhs a month for the next 7 years. I am in the higest tax bracket, so any tax benefits will be very helpful. I am not a very high risk taker, but at the same time understand that without risk there is not much reward.
My financials portfolio is as follows
1. 1 crore+ in FD’s.
2. Investing around 1 Lakh a month in LIC policies for which i will be recieving a lump sum and also around 7 lakhs/month for rest of my life, when i am 58.
3. Monthly income of around Rs 3.5 lakhs.
Can you please suggest me the following
a. FD’s – Is there any way i can get the same return of around 9%, and get tax benefits (80D)
b. I want to invest around 2 Lakhs a month, which is of low risk. I want to get tax benefits and also get decent returns on it.
Please suggest what portfolio should i create.
Rohan
Hi Hemanth,
I am planning to start investment through SIP. Please let me know where I need to Open account if os what is the appoximate fee to maintance charege.
Will you able to help in investing right MF at right time.
Thanks
Ramesh Bembalore –
9632200000Dear Expert.
It is wonderful & educating site with all honest replies to all posts.
My querry is that I am an NRI & have NEVER invested in MF / Stock .
1)Can I invest by SIP ?
2) I have limitation of not checking the market trend regularly as I am away from the country.
I have gained interest in investing in MF after reading so many posts & clear strategy. I am planning for 10 years+ investment , my current age is 42 years & planning for handsome money at the age of year 55 + to settle back in India.
Pls advise how should I begin & what way ?
Your prudent response will determine my future course of action.
Pragnesh Lotia
SIR , PLEASE GUIDE ME AS I WANT TO INVEST 5000/- BY THE SIP MODE.
WHICH FUND HOUSE SHOULD I CHOOSE & PLAN FOR SIP TO START.I M A BIGINER IN MF & SIP.
Hi Gaurav
You can consider investing in a Balanced Fund like HDFC Balanced.
Hi Anil / Hemant,
Need your suggestions reg my current investment portfolio. I am 33 yrs old, married with a kid. I have running SIP’s 5K each / month in equity MF like HDFC Top 200 (2 yrs completed), IDFC Sterling Equity Fund (1+ yr), DSP BR Equity Fund and Fidelity Equity Fund (completing 1 yr by next month). Pl advice your opinion reg the fund selection and can i continue the SIP in the above mentioned funds. I wish to continue the SIP & remain invested for more than 5 yrs (yet to setup my SMART goals).
Since i dont have PF option & to have some risk free investment i have invested in Millionaire RD 2 schemes from Corp bank with interest rates of 8.5 and 9.25 for 10 yrs and 7 yrs respectively. Along with this i have started investing FRD (flexible RD) for 3yrs, 10K / month @9.5%.
Pl advice your suggestions reg my equity and RD investments. At this point of time i dont pay any EMI (infact scared of EMI life, not sure why?). If i finally opt for EMI life how do i re-balance my investment strategy, should i compromise on SIP or RD investments.
Regards,
Chandra
Hi Chandra
Based on your risk appetite, investment objectives and investment horizon you should have proper asset allocation in different asset classes like 60% in equity mutual funds, 35% in debt and 5% in gold.
You should track your investments and review you portfolio atleast once a year. The performance of the funds should be checked by comparing with index and peers so that you can exit the nonperforming funds.
Dear Anil/Hemant,
What should be my approach if I wish to make 10 crore in next 10-12 yrs? I am a salaried person having SIP investment of Rs. 24,000/month and PF/VPF deduction of Rs. 35,000/month. I am ready to invest some more amount if require. Kindly suggest.
Regards,
Hi Bimal
You must increase your investment horizon and try to save and invest as much as you can.
HI Hemanth,
I am glade to here suggestions from u .one question ,I Invested 5,000 rs in U.T.I Mutual Fund from 2008 till 2011 for three years.now i want to quit from it .I am getting around 40,000rs more than what i invested ,is it the right move ?
Hi Dharmendra
Investment in equity mutual funds should be done with investment horizon of more than five years and you should exit a fund only if either you need money or the performance of the fund has faltered. You have not mentioned the name of the fund. Hence not possible to comment.
Hi Hemant,
I was reading all of the above Posts/ questions asked by readers and suddenly i made my mind that i should also invest in Mutual Funds through SIP.
Could you please suggest me which funds would be better for me, I am 24yrs old and earning 20k per month, and basically i don’t have much of expenses as i am staying with my parents, so I can start investing with Rs 3000/- per month. If you can guide me regarding Funds in which i can invest through SIP , that would be appreciated.
Thanks & Regards,
Sanjeev Kumar Deka
Hi Sanjeev
You can consider investing in a balanced fund like HDFC Balanced.
Hi Sailesh,
I’m harsha and i’m getting take home of 22,500.My age is 22.
In that 22,500 i’m investing
1. 5000 for LIC insurance
2. 5000 for Rent
3. and keeping 5000 for my expenses.
So i’ve left 7500 as a surplus in that i’m thinking of investing systematically
1. 2000 in PPF
2. 2000 in Franklin India Bluechip Fund
3. 1000 in HDFC Tax Saver
4. 2000 in HDFC Equity Fund
Is the portofolio ok..? Am I selected right Funds…??
I’m also confused whether I go for HDFC Equity Fund or HDFC Top 200 Fund…??
Pls guide me on this.
Thanks in advance.
Hi Hersha
For diversification you should be investing only in one HDFC Fund. So you can invest in ICICI Prudential Focused Bluechip Equity instead of HDFC Equity.
HDFC Equity is also performing very well..wat will be the problem….? R u saying i’m investing in only one fund house..?
Hi Hersha
Diversification across fund houses is required to spread your risk.
wat u r suggesting is a Large-Cap fund and i’ve already selected one Large cap fund i.e, Franklin India Blue Chip Fund.
i’ve selected one Large Cap and One Multi Cap (HDFC Equity).
if i go for ICICI Pru Focussed Blue Chip Equity i’ll be investing in 2 large cap funds at a time which would be more risky i think…..?
Hi Hersha
Large cap, funds form the core of a portfolio. Multicap funds are riskier than large cap funds.
Hi Hemant
I always wondered about the balance between paying the EMI of a loan regularly until the last installments and paying off the loan early to increase the cash flow.
To be more specific, I am running two loans with a total EMI of Rs. 11000 for another three and half years. I received an unexpected bonus of about four lakhs which could be used to pay off both loans. I have been struggling hard deciding whether to pay off the loan and use the EMI amount for investment through SIP by increasing the monthly subscription (i am running 5 SIPs ). Or keep the bonus and use it to invest equally in the 5 mutual funds as a one time increase in investment.
If you find time could you post an article on managing the ‘loan’ side of finance management. Thank you very much
Hi Guna
Although lump sum investments can also be done in mutual funds, investing via monthly SIPs is a better option. Also one should try to be debt free as soon as possible.
Dear
I want to buy Term Plan of 50lakh . which co. term paln is good for us. LIC term plan premium very high, compaire to other co. plan. i compair ICICI , Religare , and SBI, Religare offer very low premium for online term plan.
Private co. term plan advisable for buy.
Hi Hemant,
I am very new to SIP and I want to save money for future of my child . My package is 20K and i want to invest or save 1000-1500 pm . Plz suggest me for SIP fund where and when i can go ahead. I have heard much about SBI SIP ??? plz guide me
Hi Savi
You can start a monthly SIP in a balanced fund like HDFC Balanced.
Hi,
I am a new entrant to equity markets and I would like to start off with investing in mutual funds through SIP. With the information I have I have shortlisted the below given three funds with INR1500 each/month
ICICI Focussed Blue Chip, HDFC Top 200 and HDFC Prudence.
Can you pls suggest if this is OK for a first time investor like me. I would be glad if I am suggested any alternatives too.
Also I would like to thank Hemant, Anil Kumar Kapila and all others who are sharing their experiences and knowledge in making everyone financially literate. I have gained a lot through this site and have also referred it to my collegues.
Thanks
Navin
Hi Navin
You can invest in the funds
ICICI Prudential Focused Bluechip Equity.
HDFC Prudence
Only one HDFC fund will do.
Thanks Anil
Hi Anil,
I am currently invested in the below given three funds(2K each)
ICICI Prudential Focused Bluechip Equity.
HDFC Prudence
Birla Sunlife ’95 Fund
I am looking at investing another 4000 via SIP. Can you suggest me two funds. I am looking at an investment horizon of not less than 7 years.
Hi Hemant,
The below sentence from your article made me very curious to ask for more details from your side.
“It is true that SIPs make more money even if the sensex goes nowhere over a period of time”…..
I might sound pessimistic saying that the sensex will go nowhere due to one or the other issues draging it down (for example like Euro Debt, global recession, bankruptcy, slow growth etc..) after some positive rallies.
Based on your above line, a person still stands to make money provided he continues to invest in SIP over a period of time no matter which way the marked fluctuates (unlike 2008-09). Is it possible to get some illustration?
Regards,
Chandra
Hi Chandra
Click on the link-Magic of systematic investment plans.
Hello Hemant, Anil,
Could you please help me with my query posted a week back? Should I stay invested in these funds?
Have been following your posts, thanks for taking time and helping us with our investment.
Thanks,
Mahesh
Hi Mahesh
You are doing fine.Keep tracking the performance of your funds.
Thanks Anil!!
Hello Hemant/Anil,
Last 1 year ,i invested money on mutual fund as below….
1)Reliance Regular Savings Fund – Equity Option (G)–>500/- per month(from jun-2011)
2)HDFC Top 200 Fund (G)–>1500/- per month(from march-2011)
3)HDFC Prudence Fund (G)–>4000/- per month(from jun-2011)
Actually i want to split up my fund into another a mid cap equity MF and a balanced MF for coming 10 year…
or should i stick with my above MF portfolio.
My current age is 28 years.dependency is not much on me…
Please guide..
Thanks,
anirban
Hi Anriban
Keep tracking your funds and exit any non-performing fund.Frequent churning is not desirable.
Hi hemant,
Nice to meet u!I was doing trading for almost 4 yrs and lost my money completely.Nothing to complain but i understood the market works in that way.Earned a lot and lost a lot!Right now i have 6 sip plans like icici discovery,icici financial services,hdfc equity,hdfc top 200,reliance banking fund and hdfc mid cap.Investing for almost a year and need to knw the returns seems to be high in 3 rd year most of the time but people say that sip will yield unbelivable returns after 7 yrs.Can i knw the reason for this and the funds i have choosed is quiet ok?
Thanks for the help!
Hi Madhavan
It is difficult to predict returns for anybody.Your portfolio is not properly diversified as you have selected more than one fund from fund houses.
Hello!
My query about where to invest the lumpsum amount redeemed by exiting an underperforming Fund is not answered …
Pls guide.
Shambhavi
Hi Shambhavi
The amount you get after exiting an underperforming fund is obviously to be invested in a performing fund of the same category but it is better to invest via SIP rote.Lump sum investment should be done only by informed investors who have some knowledge of the market.
Hello!
I had asked you about the comparision between MIP and Bank Fds. I have made an error while asking you this query.
1. What is the comparision between FMP’s and Bank FDs ? Can we gauge the returns in an FMP at the time of investment ? Is any mention made anywhere about this before investment as no where in any Website of the Funds any data is given about this…
2. Can a SIP investment also be compared somewhat to an RD ? I have to generate an yearly amount of Rs. 40000 to pay an insurance premium, which I otherwise would have accumulated thru making an RD of Rs. 3500/ pm. Can I get the same benefit thru’ a SIP of the same amount in a good Fund?
3. Is there a good time to exit a fund ?
The reason I am asking this question is that based on Value Research advice, I had started investing in some Funds in the last year thru’ SIP, but now these Funds no longer appear in the Top rated funds.
4. Some other Websites also give advice, but I have found that only 1 or 2 funds in each Category of Funds are common among the Top rated Funds of each Website. How do I decide which to go ahead with ? It is indeed confusing!
Thanks for being so patient !
Shambhavi
Hi Shambhavi
Firstly you have to understand about risk.In general if you have either a fixed deposit or recurring deposit in a public sector bank or a post office the amount invested by you is safe.
On the other hand all mutual fund products are market linked.This means you never know what is going to be your return at the time of your investment.You can also lose your money if the selection of your product is not correct.
Time frame is an important consideration in the selection of an investment product.For short term investment only debt should be considered.In the short term you can lose money in equity.So do not invest in equity for a short time frame.
The good time to exit a fund is either when you need money or when a fund is not performing.
Different web sites use different criteria for evaluating funds.It is better to stick to only one web site like Value Research.
Hello Hemant,
Please guide about this :
1. How can we compare Monthly Income Plan (MIP) to Bank FDs in the present scenario ?
2. How can we get to know about the correct returns by the MF when actually nothing information is avaiable about it anywhere in the MF documents or website?
Shambhavi
Hi Shambhavi
Bank FDs are pure debt products where returns are known at the time of investment.
MIPs are debt oriented hybrid products where the returns are not known at the time of investment.
Fact Sheets of the fund houses provide all information regarding funds.Rating agencies like Value Research also have information on funds.
Hello Hemant,
Pls remember my last query to you about Reliance Diversified Power Sector and Magnum Contra Funds, in which I had invested in SIP a couple of years ago. They are not faring well at all and you have advised me to exit these, after tracking the performance. So I have a few qureries :
1. Pls advice an easy way to track the performance. I am a laywoman and do not have much knowledge about this. Is there a Website or something that can help ?
2. If I redeem these funds, where should I put this lumpsum amount that I get from this ?
Shambhavi
Hi Shambhavi
From the monthly statements you can easily make out how the fund is performing.You can get all information regarding funds from Value Research website.
Hi Hemant/Anil,
Which is the best way to invest in monthly SIP?
1. Investing entire amount in one single SIP date of the month.
or
2. Dividing the amount and investing in different SIP dates of the same month.
Regards,
Karthick.
Hi Karthick
In the long run it will not make much difference if you have one SIP per week or per month.It depends entirely on your own convenience.
it would be better if you post articles on VALUE AVERAGING which is a refined form of SIP . although meant for a little more risk taking investor -it eliminates risk arising out of market fluctuations in the long .
I thank HEMANT for posting a myth NO-7 SIP gives better returns than lump sum investment .
thanks
Hi Soporific
A lot of tweaked SIPs have recently flooded the market.However, I prefer to keep things simple.I feel that plain vanilla monthly SIP is the best for most investors.
Hello Hemant, Anil,
I have recently started sip’s in 6 funds, I’m looking to stay invested for 10-15 years. Could you please comment on my portfolio all the funds are growth option
ICICI Prudential focussed bluechip 2k/month
UTI Opportunities 2k/month
IDFC Premier Equity 2k/’month
SBI Magnum Emerging Business fund 2k/month
Quantum Longterm Equity 2k/month
HDFC Mid cap opportunities 2k/month
Thanks,
Mahesh
Hi Mahesh
Your fund selection is very good.
Hallo sir,
I follow your every article for financial guide(investment on mutual fund).
Now i am 28 years old ,unmarried person , this year i will go for marriage and do a private sector (IT) job.
Last 1 year ,i invested money on mutual fund as below….
1)Reliance Regular Savings Fund – Equity Option (G)–>500/- per month(from jun-2011)
2)HDFC Top 200 Fund (G)–>1500/- per month(from march-2011)
3)HDFC Prudence Fund (G)–>4000/- per month(from jun-2011)
Now after march-2012 ,i want to change my port folio..
i like to invest through MF around 10 years.
Please give some guidance ,on my port folio..
regards,
anirban
Hi Anirban
Risk appetite and investment objective are the important considerations in any type of investment.In the absence of this information it is not possible to say anything.For investment horizon of 10 years investment diversified equity mutual funds can be considered.It is not clear how much you want to invest and why you want to change your existing portfolio.
In general you can invest in around four diversified equity funds selecting one from each category of a different fund house.
I am middle class salaried person & want to invest 20,000/ per year for best return kindly suggest in which SIP/Equity fund I have to invest.
Hi JP Bhat
You can start your monthly SIP in a balanced fund like HDFC Balanced Fund.
Hi Hemant & Anil,
First of all, I would like to appreciate you for the awesome job that you do to help people on this blog.
Though people ask you the very same questions every single time (like the best mutual fund), I see you promptly reply to all of them. And, I feel your advise is of genuine interest of the investors. Thanks a lot for all of your effort & time.
About me:
I’m 31 years old, my hubby is 34 years old & have a 3 year old son. Our only liability is a home loan that we have taken early 2011. Our risk appetite is moderate & our time frame is 15 years for our son’s higher education & for my retirement.
My portfolio:
30% – MFs;
5% – Stocks
5% – Gold
5% – Cash (Emergency fund)
35% – PPF, RDs (for short term requirements) & FDs
20% – Real estate
(Does this look o.k.?)
My questions are:
1. As part of my portfolio, I want to have 5% investment in stocks. I haven’t started in stocks though I kinda of follow the market for 3+ years now. Is it a good idea to start with the MOST 50 shares ETF? I’m not very confident of understanding the valuations of a stock & may tend to choose the ‘big’ names alone, if I’ve choose.
2. About timing the exit from the market:
I’ve invested in equities only since 2007. And so far twice, I exited out of MFs as they were underperforming & also I needed that money for the prepayment of my house. And, the investments were in Red when I withdrew. (the funds were DSPBR ELSS & Franklin ELSS, SBI ULPP)
I exited out of SBI ULPP in the last week & the market was volatile every single day. Just because we didn’t have much time to submit the withdrawal form one day, the value was down by 3k the next day when we finally withdrew. Such flucations really take me aback from equities.
Could you please advise me on how should one start planning for a exit & execute it?
Thank you so much for your patience to read such a long query. Awaiting for your reply.
Cheers
Hi Lakshmi
You have a diversified portfolio which is on conservative side. Since you are young and you want to invest for your son’s education as well as your retirement with a long time frame it be better for you to increase your exposure to diversified equity mutual funds.
For investing directly in the stock market you should have a very good knowledge of the working of stock market and you should have enough time to monitor your investments as well as do the necessary home work.Most investors do not meet this requirement and tend to lose money. Moreover, you have yourself answered the question by expressing your lack of confidence.The fundamental rule of investment is to stay away from the investments which we can not understand fully.Hence it is better to shift your focus from direct equity investments and concentrate only on the mutual fund route.
In the short term you can expect a lot of volatility when you invest in equity mutual funds.But if your remain invested for a long time by following systematic investment approach, you will definitely reap the rewards of your patience.You have to learn to just ignore the short term noise.
You should not try to time the market because nobody can do it consistently.Time in the market is important not the timing of the market.
You should invest only that part of your savings in the equity mutual funds which you will not need atleast for the next ten years.Such a situation should never arise that you have to stop your SIPs for meeting your short term requirements.
You must always track your investments.You should consider exiting a fund based only on its long term nonperformance as in the short term due to market conditions the fund may not perform as per your expectations.Initial choice of funds is important.Never invest in a fund without doing your home work.
Thanks a lot for the prompt reply & a precise advise. 🙂
Sir, as usual nice article…i would like to know your analytical view regarding newly introduced HDFC SWING STP..somewhere it is designated as one of best investment strategy if continued for 10 -15 years..even it turn into ‘infinite’ mode between debt & equity…thanks
Hi ddshah
HDFC Swing STP is the expansion of STP facility.It works like any other Systematic Transfer Plan (STP). The only difference is that Swing STP tries to achieve the Target Market Value which can be more or less than the lumpsum invested in debt scheme. So, everytime, it transfers the amount from one scheme to another based on the difference between Target Market Value and Actual Market Value of current holdings.
The most unique thing about Swing STP is Reverse Transfer. In case, Actual Market Value of current holdings is more than Target Market Value, it will transfer the difference from equity to debt scheme in order to maintain Target Market Value.
Personally I am not in favour of tweaked products which are difficult to grasp.I prefer simple products which can be easily understood by all investors.
Hi Anil / Hemant,
Thanks for the article, it was really good to have knowledge on SIP.
I’ve started following SIP on ELSS :
1. Sundaram BNP tax saver – Dividend
2. Reliance Tax Saver
3. Canara Robecco Tax Saver
4. Birla Sunlife
I’m looking to invest for a period of 15 to 20 years with 1K per month for all the above mentioned schemes since it will help me in saving tax & also for having good returns.
Request you to kindly advice me on the same.
Hi Kapil Kamath
Investing in four ELSS funds makes no sense.You could have managed by investing only in one good ELSS fund.
Hi Anil,
Thanks for the information. Since I was not aware in which ELSS I should invest I thought of investing in these funds since I was told in those funds we can get good returns apart from tax benefits.
kindly suggest what can be done now.
Hi Kapil Kamath
You can increase your investment in Canara Robeco Equity Tax Saver to Rs 4000/- per month and exit other three funds.Keep on tracking the performance of the fund.
Nice article Hemantji
If I run 5 mf each 5000 by SIP for 3 years, then if one of them is underperforming, if I switch to some other better MF, can I transfer all the balance and get the benefit as if it i 36 months old or…it will be considered as fresh new investment, with fresh upfront and other commission, please explain. Thanks
Hi Seenu
Firstly, I would like to tell you that investment horizon of three years is very short for investing in mutual funds.Secondly, while selecting mutual funds you should be investing only in funds with consistent performance across market cycles.If you do your home work before starting your SIPs then such a situation should not arise that the performance of the fund starts faltering and you have to switch to some other fund.Thirdly, switching can be done in the fund of the same fund house.When you do the switching you will get the units of the new scheme at the NAV prevailing at that time.If you do the switching yourself without involving any broker then you don’t have to pay anything.
Hi Hemant,
Thanks for the article. It will certainly help me in enhancing my understanding on SIPs. Could you be helpful in sharing your expertise on inveting in Nifty Bees and how they score over mutual funds. It’s good if you can circulate some article on investment in GOLD. I t will be of great help to many.
Hi Ajay
You can refer to the old articles regarding investment in gold.
Hi Rajashri
You can start with SIP in an equity oriented hybrid fund like HDFC Balaced/HDFC Prudence on your birthday. For tax saving you can consider investing in an ELSS Fund like Canara Robeco Equity Tax Saver.
Hi Hemant ,
Really Thanks for your valuable information.I like to start with new SIP investment on my birthday 29 Feb :).. Can you please suggest with which SIP should I start with, my monthly income is 30 k.So thought of investing 2k in SIP . Also how and where I invest to do tax saving. In advance thanks for your help.
Hi Hemantji and Anil ji,
sometimes I m really surprised by the energy level that you both have, it takes a lot of energy and hard work to answer each and every questions with honest reply,
thanks to both of you, since I started reading your article and following it,
today after about an year I feel no matter how much I thank you its never enough for the work you have done for people like me.
Thank again and keep writing.
Thanks Tony 🙂
I think appreciation from readers like you is the biggest motivation…
You are welcome Tony.
Hi Hemant,
What is liquid fund and STP and does it have any benefit over SIP?
Thanks for sharing your valuable information
Poornima
Hi Poornima,
Liquid funds & STP(short term plans) are debt products. STP also stands for Systematic transfer plan – which is again a way to invest like SIP.
Hi Poornima
When you have some lump sum which you want to invest in a diversified equity fund of a fund house in a systematic manner over a period of time then you can park that amount in the liquid fund and transfer it to the diversified equity fund of the same fund house through STP route.It works just like a SIP the only difference being that instead of the money moving out of your savings bank account it moves out of the liquid fund.You can hope to get slightly better returns from liquid fund than you get from your savings account.
Hi Hemant,
Very nicely put informative article. I must confess that my perspective about financial planning has changed a lot after i started reading your articles regularly. However, as a rookie investor(i still am a rookie, but i am refering to time when i hadn’t started reading TFL’s articles), i had started investing in some M.F’s via SIP of Rs.500 – 1000 for approx. 1-2 years(Like i told you, i was a rookie back then, so SIP’s of just one year 🙁
Now, most of my SIP’s are almost a year old and hence i can switch them without exit loads, so needed some advice to rectify my portfolio. Please suggest me something. here’s my portfolio:
1. HDFC Top 200
2. ICICI Pru Discovery Plan (shud i switch this to icici focussed bluechip/ balanced fund/ liquid fund or continue with this one only?)
3. DSPBR Micro Cap Fund
4. Reliance Equity Opportunity
5. Reliance Gold Savings Fund
6. AIG World Gold Fund (Again, i don’t feel too good about this one.. 🙁 )
Thanks In Advance
Hi Rajan Kapoor
Since you are a rookie investor I would suggest you to also read the following articles:
Setting SMART financial goals.
Best Mutual Funds to Invest in 2012 in India.
Your portfolio lacks any direction. Do you have any objective of investment? Do you have any time frame in mind? You have invested in two different types of gold funds.Normally you should consider investing in gold only after you have built a portfolio of diversified equity mutual funds and your exposure to gold should not be more than 10% of your portfolio.The core of your portfolio is weak which makes it risky.
Minimum 70% of your portfolio should consist of large cap and large & midcap funds. Since you do not have a pure large cap fund in your portfolio you can consider investing in ICICI Prudential Focused Bluechip Equity.
You should not have more than one fund of a fund house in your portfolio.
Thanks Anil,
please suggest me which fund should i switch to from AIG Gold fund and/or Reliance Gold Savings Fund.
Do i switch them both or keep one of them in d portfolio?
Hi Rajan
You have not mentioned anything regarding your risk appetite, investment objective and time horizon. Moreover, how much you are investing and how much is your exposure to gold is not clear. So it is not possible to say anything.
Hai Hemant sir,
By god’s grace, somehow or other i have subsricbed my mail ID & receiving mails from you reagarding investment. After reading your information & other comments from persons who are so fortunate to have subscription like me, i have realised that how i was in completely in wrong direction, and cheated by LIC agents..i.e. i have invested about 85000/- per annum in LIC.
a) Jeevan Anand
b) Jeevan saral
c) Endowment policy etc.
Now i have decided to stop all the policies which i have taken and start new investment as PPF, in Gold, Mutual Funds and FD etc…
Now please help in this regard in which MF as SIP i have to invest as a beginner?
And also suggest me that how to get complete knowledge before investing in MF?
Hi Sreedhar,
I will suggest you to join TFL Free e-course – you will feel the change in 1 month.
Hai Hemant sir,
Thank you very very much for your response to me. And everyday i am reading your articles & comments, gradually i am getting knowledge about this stuff…I have already joined in your TFL free e-course…and i am also feeling change now itself
Hi Sreedhar
You can read the following articles by Hemant:
Best Mutual Funds to Invest in 2012 in India
Setting SMART Financial Goals – Complete Guide
As a beginner you can start your investments with an SIP in a balanced fund like HDFC Balanced/HDFC Prudence.
Hai Anil sir,
Thank you very much for your kind advice..I will start as soon as possible. But one thing to ask that Do we have any best mutual fund 2012 in related to ICIC prodential because i have demat account in that i can use it…?
What about HDFC Equity & Top200 funds as to initiate?
Hi Sreedhar
For making investments in equity mutual funds you do not need a demat account. Yes, ICICI Prudential have a very good large cap fund ICICI Prudential Focused Bluechip Equity and you can consider investing in that. HDFC Top 200 and HDFC Equity are also very good funds.
However, I would suggest you to build portfolio based on core and satellite approach before starting your investments.
Can you give me some link regarding core and satellite approach how to make portfolio? so that i can read it and make a decision based on that. I am waiting for your reply….
Hi Sreedhar
You can read the following posts.
Best Mutual Fund For SIP
Core & Satellite – Best of both Worlds in your portfolio
The decision on which funds to invest in should be made in the context of your overall portfolio that should have core and satellite components.The core will consist of anything between 60-80% depending on your risk appetite.The core will provide stability to your portfolio. It will mainly consist of equity oriented hybrid funds, largecap funds and large & midcap funds.The core segment should be made of well diversified and more predictable funds that have a proven long term record of outperformance across different market cycles. Funds that rank in the top quartile consistently over long time periods would be good candidates.
Satellite portion of your portfolio could be made of well rated funds that show the promise of good performance in the future. It will consist of multicap funds, mid & small cap funds, thematic funds, sector funds, gold funds etc. These funds are risky but have potential of high growth.
Thank you very much for your valuable information sir..
I will make my portfolio and will be shown to you as per your advice and further discussed if necessary.
Hai Anil/Hemant sir,
Please inform me how can i build portfolio based on core and satellite approach? Is any reference or link to go through and read ?
Hi Sreedhar
I think I had already replied. I don’t see my comment right now.
Hi Sreedhar
You can select your funds from the categories given in the following post:
Best Mutual Funds to Invest in 2012 in India
Hai Anil sir,
I am in the process of selecting mutual funds, but in searching of where to find out these mutual funds to purchase, i have gone through website named moneysights, and got registered my mail ID, they asked me to send some documents to activate my login.
My Question 1) Is that the above mentioned website is good to operate through?
Is it good to operate online or has to consult agents or brokers to purchage MF’s?
Hai Anil sir,
I am awaiting you reply…please…
If not, please tell me what is the procedure to purchase MF i.e. whather i can directly online by going individual websites for eg. for HDFC Mutual Fund or through agents or brokers?
Hi Sreedhar
You can select three or four funds of different categories and different fund houses from the list given by Hemant. Then you can directly approach the fund houses.There is no need to have a broker.
Hi Hemant
Based on the comments which I read I would like to share some more myths regarding SIPs but I have not hit the submit button so far fearing that my comments should not again land in your junk folder.Many of my comments written a few days back are still awaiting moderation.
Hi Anil,
There were 3-4 comments in spam – now I have approved them.
Thanks Hemant for including more points. I had a few more points in mind which I missed while typing. I guess this is short term memory loss, part of aging process.
Hi Anil,
Thanks to you for sharing relevant points – If you still have some points feel free to add in comments 🙂
Dear Hemant,
Thanks a lot for the nice article. I am new in SIP investment and would like to start a new SIP investment portfolio as a part of the retirement planning.Can you please suggest some suitable MFs for the period of 15-20 yrs ?
thanks in advance!
Hi Srirupa
Since you are the first time investor I would suggest you to also read the following articles:
Setting SMART financial goals.
Best Mutual Funds to Invest in 2012 in India.
To start with you can consider investing in a balanced fund like HDFC Balanced Fund. Later on you can build a portfolio based on core and satellite approach.
Dear Anilji,
Thanks a lot for your reply.
I will go for the HDFC Balanced Fund for a period of 15-20 yrs.
Best regards,
Srirupa
Hi Hemant,
I wish to invest in mutual funds via SIP route in the name of my Firm. Does it have any different tax implications as compared to an individual?? Wht wud u suggest with a horizon of 2-3 yrs with resonable capital protection?? Or investing in short term fixed deposit is a wiser option in the current interest rate scenario?? kindly advise. Thanks..
Hi Sameer,
There will some difference in Tax Structure as dividend distribution tax is higher in case of corporates. But if I talk about 2-3 years it will come under long term capital gain tax – in that case there is no diffrence. Looking at your requirement I will suggest to go with SIP in Short term funds – growth option. (if you withdraw any amount before 1 year it will come under short term capital gain tax)
To understand mutual fund taxation – read this
https://www.retirewise.in/2011/12/mutual-fund-taxation-in-india.html
Hello Sirji, nice article. I would like to start a sip For atleast 5 years, 2k each in dspbr top 100 and hdfc mid cap opportunity. Learned a lot from ur articles and made homework for sip. Ur views please.
Hi Jayant,
These are good funds – go ahead.
Hi Jayant
If you are the first time investor I would suggest you to also read the following article:
Setting SMART financial goals.
Hi Dear,
I think this is a one of the best article ever. This article is eye opener for every investor & trader.
I think Systematic investment plan helps you to invest at different levels irrespective of the market values. In limp sum investment your timing of market should be accurate else u loose a lot of money. In SIP you average the buying rate, hence risk is less.
But lump sum investing is more risky and professional knowledge is vital for its success. Proper exit is also essential. Cost averaging results in a lower average cost in case of systematic investing and an anti dote to market volatility. For small investors with little exposure to the market systematic investment is the best option. With a number of options there is enough flexibility and the idea of investing small regularly is suitable for salaried employees.
Hi Subham,
Thanks for Sharing your Views. Only problem with lumpsum is it increase volatility of emotions 😉 but just think once your total investment through SIP will be more than your annual income – same emotions will come to haunt again.
Hemant,
Say a person does an SIP in an ELSS fund say for 3-5 years. For the first 2 years or so the fund does well. After that say its performance dipped and it went from 5* to 1*. Since each SIP is locked for 3 years the FIFO method would mean the a good amount of the money would be inaccessible for investment in a better fund while the ELSS fund under performs While we do the FIFO withdrawal each month we can only hope that the performance picks up until the last SIP is free for redemption.
I can only see this as a limitation of ELSS sips. Perhaps they are still better than lumpsum purchase but it can be very frustrating.
Hi Pattu,
Long time no see 🙂
I agree with you & ELSS should be part of overall portfolio rather than portfolio itself.
hemantji, i read about “sip” in detail , above.
i need to tell you nothing is guaranteed in this world. nothing comes for free. you have to devote little time in SIP.
but SIP , of a different nature.
i strongly feel that MF have not performed the manner in which should. the fund managers and other marketing people make good bonuses., salaries etc. BUT dont give their best.
SAME stocks that they buy( they buy in large qty) , and we can accumulate in everyfall….then beleive me…an investor can amass wealth in alittle longer horizon….5yr…10…15..20….yrs….compunded growth of more than 40 percent.
BUT you people keep advocating to put money in MF …i totally…totally disagree. insated of giving money for “fat” paypackets of fund managers, sales men of MFs…better utilise same money to pick “multibaggers” in…everytime mkt falls….we r in an internet era….good knowledge all around….good websites are available-BSE/…..NSE …..etc.etc….ofcourse a small investor can select good stocks and keep accumulating…2-5-7-10-15 years period,…..and make phenomenal money…..why depend on NAV…etc.etc….get bonus …rights…dividends…participate in buy backs….get money in your bank in 3rd. day of sellin etc.etc…..so why SIP in MF and not in stocks ….I STRONGLY ADVOCATE TAKE CHARGE OF YOUR MONEY …….AND KEEP ACCUMULATING GOOD STOCKS …IN EVERY FALL………..THERE ARE MANY ….MANY GOOD STOCKS…….these are my thought sfor small invesors…keep away from MF …and dont watch….TV channels like CNBC…..
Hi Jatnder,
I don’t want to make any comment on you views but just would like to add on this line
“we r in an internet era….good knowledge all around…. good websites”
What you receive from internet or specific websites including TFL is not knowledge but just information.
I would also like to add “Can a person used to swimming in a pool switch to swimming in an ocean or river at will? The answer seems self-evident as swimming in a pool is far easier as it is a controlled environment. Swimming in a river or ocean is far more difficult as one has to contend with the surging waters, currents and whirlpools.
There are of course other lurking dangers like alligators, sharks and so on, which can cause harm. So, even those who swim regularly in pools aren’t always willing to jump into a river or ocean. Apart from the perils involved, swimming in the open, also calls for higher level of skills. It even involves different, special skills, not required in a pool.”
Mutual Fund is a swimming pool & direct equity is an ocean – investor need to decide what they want to do.
Wow… That was so beautifully put comparison. 🙂
Nice reply .; Nice for clear thought.
Hi Jatnder
You are entitled to your views but you can not make a generalised statement that investing in mutual funds is not good and that small investors should keep away from mutual funds. The combined assets of mutual fund houses as on January end are Rs 6.59 trillion. This goes to show that a large number of investors have a faith in mutual funds.In comparison not even a fraction of this is invested by small investors in direct equity. We can not insult the intelligence of investors investing in mutual funds. Obviously they are not fools.
Moreover there are a lot of options available to mutual fund investors.If you don’t trust a fund manager you always have option of investing in index funds. It is also not correct to say that all fund managers do not give their best.The performance of the funds depends on the fund houses , fund managers and the condition of the market. We have many good fund houses, fund managers and funds with good track record.
During last year when markets have not given anything, a large number of funds have manged to beat the index.Direct investing in equity is not possible for a small investor who has no knowledge of the functioning of stock markets and no money to put in expensive stocks. How many so called good stocks can a small investor buy in Rs 500? How many small investors know how to operate a demat account? How many small investors know how to use a computer? How many small investors know when to buy and when to sell?
yes, every word is true.We can only know a little about other expences bt all the fund houses.
This article is eye opener for me. Just a thought, instead of going for SIP, investing in PPF is good or bad?
Hi Rohit,
You are talking about a different asset class – I presume that you are talking about SIP in equity funds.
Ok. If i want to make profit by investing, which one is beneficial in long terms (SIP or PPF)?
Hi Rohit,
SIP is not investment 🙂 if you are talking about PPF Vs SIP in Equity Mutual Funds – SIP in Equity Mutual Funds can generate better returns but journey is going to be volatile.
Hi Rohit
Equity and debt both have a place in investment portfolio depending on the requirement. It is not a question of good or bad.
Hi Hemanth,
I am investing monthly SIP of 3K in BSL Equity Fund – Gr and 3K in HDFC Top 200 Fund-Gr from Apr 2011. Is it correct to continue in these plans and do I need to quit from these?
Pls suggest.
Hi Kamati,
Your funds look ok. But from next time first investigate & then invest rather than opposite. 🙂
Thanks Hemanth..
Hi Kamati
After starting your SIPs you have to keep tracking the performance of your funds by comparing the returns with the index as well as category average. You have to consider exiting the fund if its performance falters consistently over a long period of time.You don’t have to sit on your funds. Investing is a dynamic process.
Hemant’ji, thanks for this article. I was not aware about tip#5 which clarifies on actual wait period for all MF invesment through SIP, to be freed up for withdrawl.
As each SIP is considered unique purchase as far as withdrawl is considered, does it cost ‘extra maintenance cost’ everytime I purchase some MF units through monthly SIP? I mean anything like entry load etc….which pushes more maintenance cost for SIP investors vs lumpsum investors?
Hi Piyush,
There are 1 year exit loads in most of the equity mutual funds & as you rightly understood that every purchase is a unique purchase – so you have to pay exit loads if you would like to withdraw before 1 year. But I don’t think that should be of much of concern if we compare it with the benefits that SIP provides.
Hi sir,
i am Hrishikesh i always give feedback to your article as this is also nice article but it Confused me, because I have started SIP of 1500 and 1000 in HDFC and reliance in oct 2011 my age is 25 and income is 20K, I am looking planning to continue this for 10yr, ( also I will increase the amt if my salary increases and after my home loan EMI amount get fixed)
So it is valid or am I on a wrong track ?
Hi Hrishikesh,
SIP is a great way to invest & you are on right track 🙂
thank you very much sir…
Hi Hrishikesh
You have not mentioned the names of schemes you are investing in. So it is not possible to comment whether you have selected correct funds or not.
Thanks a lot Anil ji for the input…
Is it worth to start a SIP in gold Mutual fund with a long term horizon?? (7-10 yrs). Or should we still wait for gold to come down??
If i shd go ahead , which gold MF’s do u recommend??
Hi Sameer Shah
Gold prices keep on moving up and down and nobody can predict when the prices will come down.So the best approach is to start a SIP in some Gold Saving Fund.All funds are more or less similar you just see the charges and invest where the charges are low.You can look at Reliance and Quantum funds.
Normally exposure to gold should be taken only after having a portfolio of diversified equity funds and exposure in gold should be limited to around 10% of the portfolio.
Dear Mr. Beniwal,
Good write up!!, I would like you to give a insight to the investors about the benefits of averaging and tax savings by SIP in ELSS schemes. One of my friend in a very reputed AMC has a beleif that SIP should never be done in ELSS. where as i beleive that its better to loose ur pocket gradually instead of investing lumpsum at the end of year.
eg. instead of investing 48000 in march 2013 for the fy 12-13 and freeing the units in march 2016 one should start investing Rs. 4000 from april 2012 and statrt freeing all the units from april 2015 and free all the units on march 2016
Regards
Ankit Tunkaliya
Hi Ankit,
I completely agree with you regarding SIP in ELSS. I just added this point because lot of people keep asking this question on TFL.
Hi Ankit
I have also heard many investment pundits on TV channels advising investors to invest only lump sum amounts in ELSS schemes. The logic they give is that because of the lock in period of three years people will not be able to get their money back at one go. I fail to understand why don’t people treat investment in ELSS schemes just like investment in any diversified equity fund.
Hi Hemant,
Nice writeup again, you bloggers have enlightened many of us on personal finance. As a result I ended up investing in SIP & took term insurance.
I have a request here, can you or any of the reader advise on withdrawing from SIP after lock period
Thanks….KK
Hi KK,
Its good that you are learning & also taking action to improve your financial life. But be very frank each individual is different so follow advice with pinch of salt.
Hi KK
I do not understand what you mean by withdrawing from SIP after lock period.
Hi Hemant
Nice article in the right time as i found a few coming up in the last few days and was asking exactly about sip as an “investment”. With some time with them i could make out that some misselling / promotion was happening. Like we all learn the bad words first coming across a new language, the investment options too the same. we learn chits, gold, real estate, sb, credit cards, fd, ulip, “insurance” investment…. and if lucky hear/learn of equity and if very very lucky hear/ learn/ understand SIP mutual funds…. This is called “market” “regulation”. 🙂
Hi Shinu,
This is called market DE-regulation 😉
Hi Shinu
When we look for investment options diversification across all asset classes is important. Gold, real estate, fixed deposits, equity mutual funds all have a place in investment portfolio.Unfortunately most people neglect asset allocation and concentrate only on one type of asset class.
Dear Anil
The problem is the understanding of “diversification”. People just follow the the momentum seen anywhere which already had made the major gains. invested in stocks in 2007, invested in real estate in 2008, invested in gold in 2010, invested in debt in 2011…. They already missed the real rally the CAGR is horrible if not negative. SIP is not taught properly (to those FEW who are ready to learn tooooo in its fullness) except by few good men like you. God bless.
Hi Shinu
There is no substitute for financial education.
Very nice article Hemant…as usual i must say. Its a great eye opener for those who are still averse to mutual funds, but wont hesitate to invest in direct equity without a god homework. I have a query here- i want to opt for a transfer of fund in the same fund house . Should i invest it as a lumpsum ?? or Should i redeem it completely & invest via SIP mode?? Kindly advise.
Hi Sameer,
If it is in the same fund house, you can simply switch it.
thanks a lot hemant
Hi Sameer
It is not clear whether you have invested lump sum in your present scheme or you are investing via SIP route.If it is lump sum then simple switching to the new scheme will do. If it is a SIP then when you opt for a switch then only the units which have already accumulated in the existing scheme get switched but your SIP continues.If you want to completely get out of a scheme then you will have to give instructions to the fund house to stop your SIP and you will have to apply for SIP in the new scheme.
Exxxxcellent article Hemantji. I was just loving your sarcasm in busting the first myth.
One of my colleague was cursing the mutual funds that he could not withdraw his entire investment done via SIP in ELSS, I am going to show this article to him tomorrow.
Jokes apart, I think this clears a lot of misconception people carry around.
Hi Mansoor,
I keep hearing & reading that people are investing systematically in direct equities & even few of the broking houses designed products around that. Hope this point will help people to understand that something is wrong somewhere.
Hi Hemant
Although I do not invest in equities but I do sometimes listen to the questions people generally ask on business channels. One of the most common question is – I have bought so many shares at this price and I have lost so much of money, should I sell or average? Many times the market guru tells the investor/trader to buy more to average.The logic given is that the markets are being driven by sentiments and not by fundamentals.This concept of averaging makes no sense to me.
You have mentioned- sanity says one should invest equities when you have done your homework.
I think this is a universal rule which is applicable to all types of investments.Even in the case of mutual fund investments it would be foolish to do investments without doing home work.
I think only those investors who do not do their home work become victims of the myths you have mentioned.
Only financial education can burst these myths.
Hi Anil,
You rightly mentioned regarding averaging in stocks – it is like throwing good money to save bad money. Particularly in stocks, investment decision should be taken with extreme care bcoz there is always a probability that price will never recover.
Hi Hemant,
My understanding as far as averaging out is that it is ok to average out on ETFs but not on stocks. So currently I have set up SIPs for investing in NiftyBees. Is this a correct move?
Thanks,
Amar.
Hi Amar,
Its good that you understand this concept.
Hi Hemant
SIP is no longer a simple mode of investment in mutual funds.Many mutual fund houses have now come up with tweaked SIPs which allow you to invest more when the market is down and less when the market is high.These new SIP tweaks fine tune the strategy of buying low and selling high.
In some strategies you need to invest in a liquid/ debt/hybrid fund via SIP or lump sum and the money gets switched to an equity fund based on some trigger of Nifty/Sensex.
In other schemes SIP is done into an equity fund and the amount is increased periodically within a minimum and maximum range.
These tweaked plans are being sold under fancy names like Prepaid SIP, Power SIP, OptiSIP, SIP Top-Up, Smart Step Plan etc.
These tweaked SIP plans have some advantages and disadvantages but are difficult to grasp for most investors.
In my opinion discipline is the most important thing in mutual fund investing. If you have difficulty in grasping the methodology of tweaked SIPs then it is better to stick to a traditional monthly SIP.
Hi Anil,
People hate simplicity – they want something that is complex & fancy.
On paper these fancy SIPs can look good as all are designed on some back testing & few assumptions but in long term I don’t find any good reason to invest through them.Indian fund houses have time & again tried to lure investors with such tricks. 🙁
Some companies have started misusing people’s myths about SIP. ICICI Prudential have a junk ULIP in the name gSIP. (Guaranteed Savings Insurance Plan). Also agents from LIC and other insurance frauds started similar products.
Regards,
Shinoj
Hi Shinoj,
I think I missed this important point – ULIPs are sold as SIP & few of the products are named SIP to mis-sell.