What Are SIP Mutual Funds? 10 Best SIP Funds to Invest in 2022

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Introduction

How many childhood dreams have you fulfilled by building up savings in your piggy bank? Remember how you’d patiently wait for the bank to fill up until it was ready to be broken open? Books, games, candy—those were the treasures we hankered for. Now you’ve grown up and so have your dreams. You want to own high-end gadgets, the latest cars, or even a property in a swanky locality. There’s no reason why such expensive purchases should be out of your reach.

All you need is financial discipline and some know-how to invest in the right SIP mutual fund. Systematic Investment Plans (SIP) are a way of investing in mutual funds in which you contribute a certain amount of money at regular intervals—each month, each quarter, and so on. It’s a great way to increase your wealth because of the compounding effect.

You don’t need to stress over market ups and downs nor do you need to know the right time to invest. Since the initial investment could be as low as INR 500 per month, even students with part-time jobs or people with low incomes can contribute. Of course, with the glut of SIP mutual fund schemes in the market, you need guidance on the best mutual funds for SIP, and that’s how we want to help you. Let’s see how SIPs offer better returns on your investment over the long term.

What Are SIP Mutual Funds?

“What is SIP in mutual funds and why shouldn’t I just go for FDs and RDs? It was good enough for my parents!” With SIPs, you can invest a fixed amount of your choosing in a mutual fund scheme at defined intervals. By investing small amounts regularly over a period, you get higher returns than if you had invested a huge amount in one go.

You don’t have to block a large amount of money for a long time to get returns.
You don’t get penalised for missing payments. Don’t pay if you’re running short of money that month.
You can give your bank standing instructions to deduct a certain amount from your account each month. It’s that simple.
You can start or stop payments whenever you want.
You can also withdraw money for emergencies without having to pay fines.

Sounds like quite the way to build a nest egg, isn’t it? However, don’t make the mistake of diving into the first SIP you come across! As in life, every choice has some pros and cons. You need to see which option suits you best depending on your earning power, situation in life, and willingness to take risks.

In the words of Shelby M.C. Davis, a retired American investor and money manager, “Invest for the long haul. Don’t get too greedy and don’t get too scared.” SIP mutual funds are great for beginners in the investment game because you have some leeway. Even if you’ve committed to investing too much in the beginning, you can always scale back future investments in the same scheme. You don’t need to worry about being punished for taking immature or hasty decisions.

We wish you a prosperous financial journey!

The Best SIP Mutual Funds in 2022

How would you describe yourself when it comes to money? Are you afraid of losing the money you worked so hard to earn? Or do you get a thrill out of placing your bets on something reasonably risky?

That’s how you can determine what type of SIP mutual fund will be best for you. If you are conservative with your money, invest in debt mutual funds because these schemes put your money in relatively stable investments like Government Bonds. If, on the other hand, you’re made of sterner stuff, you can choose riskier investments like equities or flexi-cap schemes.

Let’s learn about some of the best mutual funds for SIP to help you make an informed decision:

1. Motilal Oswal Midcap 30 Direct Growth

It is one of the best mutual funds for SIP and is categorized as an equity fund, which means it will invest your money in stock markets. In turn, this means that the returns you can expect to get are dependent on how the stock market performs. It is a great option if you want to make a long-term investment because it gives higher returns than other types of mutual funds. What’s more, the minimum investment required is INR 500. It has no lock-in period so if you need money for that emergency dental treatment, feel free to withdraw your money.

2. Nippon India Multi Cap Fund – Direct Plan-Growth

It is one of the most popular equity funds that was launched in 2013. Probably because the minimum sum for payment is INR 100 and you are not prohibited from withdrawing your money partially or even fully from the scheme when you need it. It aims to give you constantly higher returns by investing in debt market securities that are stable assets.

3. Tata Small Cap Fund Direct-Growth

It is an equity mutual fund scheme that was first introduced to investors in 2018. For as little as INR 150, you can get started with this scheme. And it doesn’t bind you with a lock-in period. Of course, you need to be prepared to take some risks because it invests in the stocks of small-cap companies i.e. companies with smaller total market value—below $1 billion. That’s why this scheme does not guarantee high returns.

4. HDFC Flexi Cp Fund- Direct Plan- Growth Option

An equity fund launched in 2013, it is also one of the best mutual funds for SIP in 2022. Don’t take our word for it—start an investment with just INR 100. It’s an open-ended mutual fund scheme that allows people to start and stop investing at their convenience, although there could be certain charges. The scheme doesn’t need you to sit out a lock-in period, though.

5. ICICI Prudential Balanced Advantage Fund Direct Plan-Growth

A hybrid mutual fund, it was launched in 2013 and it’s considered a moderate-risk investment because it puts your money into a variety of assets with mixed risks, like equities and debts. With a regular investment of INR 100, you could start building the foundation for your dreams. It’s also an open-ended fund so you can enter or exit the scheme at any time.

6. Kotak Equity Hybrid Direct Growth

With this SIP mutual fund, you can invest in equity and equity-associated money and debt instruments. It is a good option to generate income and growth but it’s considered a very high-risk scheme. Since the minimum investment for the SIP is INR 1000, it will suit you if you have more cash to invest.

7. Baroda BNP Paribas Balanced Advantage Fund Direct-Growth

It is a hybrid mutual fund that was launched for investors in 2018. By investing in a portfolio of various equity-linked securities and equity, the scheme will help your money grow. The scheme also aims to raise income through investments in debt and money market instruments.

8. HDFC Credit Card Risk Debt Fund Direct-Growth

This mutual fund is also a joint debt scheme. It primarily aims to invest in below-rated corporate debt and AA. It is an excellent option to generate income and capital appreciation.

9. Edelweiss Government Securities Fund Direct-Growth

A debt mutual fund scheme, it was launched by the Edelweiss Mutual Fund in 2014. With just INR 500, you can get started and double your money through investments in temporary debt and money market instruments.

10. ICICI Prudential All Seasons Bond Fund Direct-Plan-Growth

A debt mutual fund, it was launched by ICICI Mutual Funds in 2013. It is one of the best mutual funds for SIP in 2022. It seeks to grow your money by investing in money market instruments like certificates of deposit, commercial papers, treasury bills and repurchase agreements and debt instruments of various periods.