Top SIP plans for new investors in 2024: smart investment choices for long-term growth
Investing in a Systematic Investment Plan (SIP) is one of the most effective ways to build wealth over time. It allows investors to invest a fixed sum of money regularly in a mutual fund, providing a disciplined approach to investing. For new investors, SIPs are an excellent way to enter the world of mutual funds, as they offer benefits such as rupee cost averaging, flexibility, and the power of compounding. However, with numerous SIP options available in the market, choosing the right plan can be daunting.
This article will guide new investors through some of the top SIP plans for 2024, highlighting the best-performing funds across various categories to help you make an informed decision.
Understanding Systematic Investment Plans (SIPs)
Before diving into the top SIP plans, it’s important to understand what a SIP is and why it can be an ideal investment option for beginners. A Systematic Investment Plan (SIP) allows an investor to invest a fixed amount of money at regular intervals (usually monthly) in a mutual fund scheme. The amount invested is used to purchase units of the fund, allowing investors to accumulate units over time and benefit from market movements.
The primary advantages of SIPs include:
Rupee Cost Averaging: By investing a fixed amount regularly, investors buy more units when prices are low and fewer units when prices are high, effectively averaging out the cost of their investments.
Power of Compounding: The returns generated by SIP investments are reinvested, enabling the investment to grow exponentially over time.
Flexibility: Investors can start with a small amount and increase or decrease the amount as needed. SIPs can be paused or stopped without any penalties.
Best SIP Plans for New Investors in 2024
1. Large-Cap Funds: ICICI Prudential Bluechip Fund
For new investors looking for stability and steady growth, large-cap funds like the ICICI Prudential Bluechip Fund are an excellent choice. This fund primarily invests in blue-chip companies, which are well-established, financially stable, and have a track record of consistent performance.
The ICICI Prudential Bluechip Fund has consistently delivered solid returns by focusing on quality companies with strong fundamentals. The fund’s strategy of investing in large-cap stocks reduces the risk of volatility, making it suitable for risk-averse investors who are looking for long-term wealth creation. Over the past five years, the fund has provided an average annual return of around 11-13%, which is impressive given its relatively lower risk profile.
Investing in this fund through SIPs can help new investors build a robust portfolio foundation, benefiting from the growth of India’s leading companies.
2. Multi-Cap Funds: Kotak Standard Multicap Fund
Multi-cap funds, like the Kotak Standard Multicap Fund, offer a diversified approach by investing across large-cap, mid-cap, and small-cap stocks. This diversification helps in reducing risk while offering higher growth potential than purely large-cap funds.
The Kotak Standard Multicap Fund is known for its balanced investment approach, dynamically allocating assets across market capitalizations based on prevailing market conditions. This flexibility allows the fund to capitalize on opportunities in various segments, enhancing returns for investors. The fund has a strong track record, with returns averaging around 14-16% annually over the last five years.
For new investors, this fund is an excellent choice, providing a blend of stability and growth by diversifying across different segments of the market.
3. Mid-Cap Funds: Axis Midcap Fund
Mid-cap funds, such as the Axis Midcap Fund, focus on investing in medium-sized companies that have the potential for higher growth than large-cap companies but with relatively higher risk. The Axis Midcap Fund is a popular choice among investors due to its consistent performance and focus on quality stocks with strong growth potential.
The fund’s investment strategy centers on picking mid-cap companies with robust business models, competitive advantages, and the ability to grow earnings over the long term. Despite the inherent risks associated with mid-cap investing, the Axis Midcap Fund has managed to deliver impressive returns, averaging around 17-19% annually over the past five years.
This fund is ideal for new investors who are willing to take on a bit more risk for potentially higher returns. A SIP in this fund allows investors to mitigate some of the volatility associated with mid-cap stocks, making it a viable choice for long-term investment.
4. Small-Cap Funds: SBI Small Cap Fund
For new investors with a higher risk tolerance and a longer investment horizon, small-cap funds like the SBI Small Cap Fund can offer significant growth potential. Small-cap funds invest in smaller companies that have the potential for exponential growth but are also more volatile compared to large or mid-cap stocks.
The SBI Small Cap Fund is known for its careful stock selection and disciplined approach, focusing on high-growth companies with a sound business model. Over the past five years, the fund has delivered average returns of around 18-20%, making it one of the top-performing funds in the small-cap category.
While the risk associated with small-cap funds is higher, the potential for superior returns can be substantial. A SIP in the SBI Small Cap Fund can help new investors take advantage of market opportunities while managing risks through regular, disciplined investments.
5. Equity Linked Savings Scheme (ELSS): Mirae Asset Tax Saver Fund
For new investors looking to save taxes while growing their wealth, an Equity Linked Savings Scheme (ELSS) like the Mirae Asset Tax Saver Fund can be an ideal choice. ELSS funds invest primarily in equity and equity-related instruments and offer tax benefits under Section 80C of the Income Tax Act, with a lock-in period of three years.
The Mirae Asset Tax Saver Fund has garnered attention for its consistent performance and robust portfolio of diversified stocks across sectors. The fund aims to generate long-term capital appreciation by investing in quality companies with sustainable growth prospects. With average returns of around 15-17% annually over the last five years, this fund not only helps in tax saving but also offers substantial growth potential.
Investing in the Mirae Asset Tax Saver Fund through SIPs can be an excellent strategy for new investors who want to build wealth while taking advantage of tax benefits.
6. Balanced Advantage Funds: HDFC Balanced Advantage Fund
Balanced Advantage Funds, like the HDFC Balanced Advantage Fund, provide a mix of equity and debt exposure, dynamically adjusting the allocation based on market conditions. This strategy helps in balancing risk and return, making it suitable for new investors who are looking for moderate growth with lower volatility.
The HDFC Balanced Advantage Fund has a proven track record of managing market ups and downs effectively by dynamically shifting between equity and debt, depending on market valuations and trends. The fund has delivered steady returns, averaging around 10-12% annually over the past five years.
For new investors, this fund offers a balanced approach, providing growth opportunities while mitigating risks through a diversified portfolio of equity and debt.
7. Debt Funds: ICICI Prudential Corporate Bond Fund
Debt funds, such as the ICICI Prudential Corporate Bond Fund, invest primarily in high-quality corporate bonds, providing stable returns with lower risk compared to equity funds. These funds are ideal for new investors who prefer a conservative approach to investing or want to balance their portfolio with low-risk assets.
The ICICI Prudential Corporate Bond Fund focuses on investing in AAA-rated corporate bonds, offering a good balance of safety and returns. The fund has delivered average returns of around 7-9% annually over the past five years, making it an attractive option for risk-averse investors.
Investing in this fund through SIPs can provide a steady income stream with lower risk, making it suitable for new investors looking for stability.
8. Index Funds: UTI Nifty Index Fund
Index funds, such as the UTI Nifty Index Fund, aim to replicate the performance of a specific market index, such as the Nifty 50. These funds offer low-cost exposure to a diversified portfolio of top-performing companies, making them an excellent choice for new investors.
The UTI Nifty Index Fund is known for its low expense ratio and simple investment strategy. It has delivered returns in line with the Nifty 50 index, averaging around 12-14% annually over the past five years. This fund is ideal for new investors who prefer a passive investment approach and want to invest in the growth of the broader market.
SIPs in the UTI Nifty Index Fund offer a cost-effective way to invest in the equity market with minimal risk and a long-term growth perspective.
9. Thematic Funds: SBI Consumption Opportunities Fund
Thematic funds, like the SBI Consumption Opportunities Fund, focus on specific themes or sectors, such as technology, healthcare, or consumption. These funds offer concentrated exposure to high-growth sectors, making them ideal for investors who have a strong conviction about a particular theme.
The SBI Consumption Opportunities Fund focuses on companies that benefit from rising consumer demand in India. With the growing middle class and increasing disposable income, the consumption sector presents significant growth opportunities. The fund has delivered impressive returns, averaging around 16-18% annually over the past five years.
While thematic funds come with higher risks due to their concentrated exposure, they can offer substantial rewards for investors with a high-risk appetite. A SIP in this fund allows new investors to capitalize on emerging trends while managing risk through regular investments.
10. International Funds: Franklin India Feeder – Franklin US Opportunities Fund
For new investors looking to diversify their portfolios globally, international funds like the Franklin India Feeder – Franklin US Opportunities Fund provide exposure to the U.S. equity market. This fund invests in high-quality US companies with strong growth prospects, offering a hedge against domestic market volatility.
The Franklin India Feeder – Franklin US Opportunities Fund has consistently performed well by investing in companies across various sectors, including technology, healthcare, and consumer goods. The fund has delivered average returns of around 14-16% annually over the past five years.
Investing in this fund through SIPs provides new investors with an opportunity to benefit from global growth trends while reducing the risks associated with investing in a single market.
Selecting the right SIP plan is crucial for new investors to achieve their financial goals. Each of the SIP plans mentioned above offers unique benefits and caters to different risk appetites, investment horizons, and financial objectives. Whether you are looking for stability, growth, tax benefits, or global exposure, there is a SIP plan that aligns with your needs.
As a new investor, it is essential to evaluate your risk tolerance, financial goals, and investment horizon before choosing a SIP plan. Diversifying across multiple SIPs can also help balance risk and maximize returns, ensuring a well-rounded investment portfolio that grows steadily over time.
