How can I convert my current SIP plan into a lump sum?

Mutual fund investment offers flexibility to the investor. Both systematic investment plan (SIP) and lumpsum investment helps investor achieve diverse investment goals of the investor. However, each mode of mutual fund investment comes with its own benefits. SIP investment allows you to invest a certain amount at regular intervals for a specific period in a disciplined way. On the other hand, a lump-sum investment is a one-time investment into a mutual fund scheme.

As a mutual fund investor, you may want to convert your SIP plan into a lump-sum investment option, but there is no such thing called conversion from SIP to lump-sum. If you want to convert your SIP investment into a lumpsum investment, you first need to stop the systematic investment plan and then can invest the lump sum corpus into a mutual fund. Both SIP and lump sum are different modes of investing in mutual funds. You can do the sifting from SIP investment strategy to lumpsum strategy in two ways:

  1. Stop the existing SIP investment, redeem or switch the SIP value into another mutual fund scheme in lumpsum.
  2. Stop the existing SIP investment and leave it there to grow for the long term. Make upcoming investments in lumpsum.

Before starting your lump sum investments in a mutual fund, you can easily calculate the estimated return and fund value using a lumpsum calculator.

What is a lumpsum calculator?

A lumpsum calculator is a valuable tool available online that helps you calculate the estimated future value of your lump sum mutual fund investment. It is the simple and easiest way to estimate the future value of your lumpsum investment. The calculator is designed based on the below mathematical formula:

A = P (1+r/n) nt

In this formula,

A – Estimated future value of a lumpsum investment

P – Principal or Initial investment amount

r – estimated rate of return

t – total investment duration

n – compounding frequency in a year

Let’s take an example to understand this. Let’s say you have invested INR 5,000 in SIP for 3 years and the value of the same today is INR 2,20,000. Let’s say you plan to invest this corpus into a lump sum for the next five years and you expect the estimated rate of return to be 12% p.a. Let’s calculate the estimated future value of your lumpsum investment into mutual funds:

A = P (1+r/n) nt

    = 2,20,000 (1 + 0.12/1) 5

      = INR 3,88,000

You can calculate this estimated future value in no time using the lumpsum calculator online. Using the lumpsum calculator online is extremely simple and easy. You can get the results in seconds within a click. Here is a simple step to follow to calculate the estimated future value of your lump sum mutual fund investment using a lumpsum calculator.

  • Log on to lumpsum calculator online
  • Click on ‘I know my investment amount’ and mention the lump sum amount that you are investing in a mutual fund
  • Select the period in years
  • Choose the investment strategy. The estimated rate of return is taken based on the investment strategy chosen. The estimated rate of return for an aggressive strategy would be 12%, 8% for a balanced strategy, and 6% for a conservative strategy. You can also customize your investment strategy.
  • Click on ‘calculate’ to know the estimated future value of your lumpsum investment.

In case you know your goal amount, you can select the ‘I know my target amount’ option to know how much lump sum amount you need to invest in a fund to reach your goals. In that case, you need to provide your target amount, period of investment, and investment strategy to calculate the lump sum amount to be invested in a mutual fund

You can make use of these valuable tools available online to plan your investments.

How you can personalize your investment experience?

Good personal finance management is extremely important to achieve all your financial goals. The way we manage our personal finance has a huge impact on the cash flow, savings, and investment growth. It is crucial to have a solid plan for accomplishing each of your financial goals. To do so, it is first important to figure out your goals and risk tolerance. Based on that you can build an investment portfolio that is personalized to your needs. Wondering how you can personalize your investment experience? ET Money Genius is the right platform for you!

The covid pandemic has taught important money lessons to many. People have realized the importance of building an emergency fund and creating a solid financial plan to move towards financial freedom. This has opened up new investment ideas in the country. But as investors are you making the right choice of investment or just buying investment products on the digital platform without a rational thought? This problem can only be solved by personalization of investment. The most cost-effective way to personalize your investment experience is through ET Money Genius. 

What is ET Money Genius?

ET Money Genius is India’s top-rated personal finance management and mutual fund investment app that adds personalization to your investments. ET Money Genius is one of its kind membership service that promises to provide personalized investment intelligence. Yes! ET Money Mutual Fund App has been revamped as ET Money Genius to ensure each of its investors gets a personalized investment experience. ET Money Genius helps you make an investment based on your risk profile, investor personality, investment style, life goals, and time frame to achieve those goals.

How does ET Money Genius help you get a personalized investment experience?

ET Money Mutual Fund App is a multi-asset personal finance management app that helps you invest in various investment products such as direct mutual funds, fixed deposits, stocks, and national pension schemes. You can avail the ET Money Genius membership to get a personalized investment experience. Once you set up an account with ET Money Mutual Fund App and take an ET Money Genius membership, you get the benefit of a personalized investment plan in the following ways:

  • ET money genius analyses your personality and investment mindset. And, measures your risk tolerance capacity based on your response to the questionnaire. 
  • Once you get your risk score, ET money genius makes an investment strategy and recommends the portfolio separately for your short-term, medium-term, and long-term goals.
  • ET money genius gives you a dynamic asset allocation model that helps you consistently beat the average to make significant growth. The recommendations and strategies are based on various factors such as valuation, inflation, price trends, and the interest rate. As the scientific evaluation method is used, personalized investment solutions provided can help you achieve each of your goals in a disciplined way.
  • One of the most important features of ET money genius is that its recommendations are aligned to your goals or expected outcomes from an investment. ET Money Genius curates a portfolio based on your specific investment need.
  • With a detailed parameter of each product, ET Money offers you transparency and helps you make an informed choice. 
  • ET money genius also helps you manage risk efficiently. With timely alerts, it helps you monitor and rebalance your portfolio.
  • ET Money Genius provides you with a holistic and personalized investment solution for wealth creation. 

ET Money Genius is an excellent facility that simplifies and personalizes your investment experience by helping you make informed investment decisions based on your life goals, risk appetite, and time horizon. 

List some best tax saving investments

Tax planning is an important aspect of your financial planning. When you plan your taxes efficiently, you can increase your income. Hence, tax-saving investment options play an important role in your yearly investment decisions. The Income Tax Act, 1961 has provisions of the tax deduction for various investment options under various sections. Let’s list out some of the best tax-saving investments that can help you reduce your tax outgo.

Best tax saving investments

Some of the most popular tax-saving investment options for individuals are listed out under Section 80C of the Income Tax Act, 1961. Under this section, you can claim up to the limit of INR 1.5 lakhs in a financial year. Let’s take a look at some of the popular investment options that qualify for tax deduction under this section:

  • ELSS Mutual Funds

Equity Linked Saving Schemes are the type of diversified equity mutual funds that offer tax benefits along with the benefit of capital appreciation over the long-term period. However, ELSS funds come with the shortest lock-in of three years in comparison to other tax-saving investments. That means you can liquidate your investment only after the completion of three years of investment. You can invest in a lump sum or via systematic investment plans (SIPs) in ELSS funds. ELSS funds have the potential to deliver an inflation-adjusted return over the long run which can be considered as a great investment choice not only to save tax but also for your long-term goals. Also, long-term gains from ELSS, if not exceeding INR 1 lakh a year qualifies for tax exemption.

  • Unit Linked Investment Plans

Unit Linked Investment Plans, popularly known as ULIPs are the hybrid products offered by the insurance companies that offer the triple benefit of investment, insurance, and tax saving. ULIPs are the market-linked investment products that invest a major part of the premium into a variety of funds or investment options chosen by you. ULIPs are the most flexible and transparent investment options. You can select the combination of funds based on your goal and risk appetite. However, your investments are locked in for five years in this tax-saving investment option. It allows you to switch from one fund to another depending on your assessment of market conditions, allows you to make partial withdrawals after the completion of the lock-in period to meet urgent liquidity requirements if any. ULIP proceeds are tax-free under Section 10(10D) of the IT Act.

  • 5-year Bank Fixed Deposits

Five-year bank fixed deposits are one the popular and most preferred tax-saving instruments of conservative investors. This tax-saving investment comes with a lock-in period of five years. As the investment is in low-risk fixed income bearing instruments, returns are also fixed. Currently, bank FD would give you 5% to &7% p.a. interest. However, the proceeds on maturity are taxable.

  • National Pension System (NPS)

National Pension System is a government-sponsored voluntary pension scheme that helps you contribute towards pension account over a period to secure your post-retirement life. There are two types of NPS account – Tier I and Tier II. In this tax-saving instrument, you can save tax extra by availing an additional deduction of INR 50,000 on your investment. That means you can avail of a deduction of up to INR 2 lakhs on contributions made in a financial year.

  • Public Provident Fund (PPF)

PPF is one of the most preferred and popular tax-saving investments that help you create a financial cushion for your golden years. Contribution to PPF qualifies for tax deduction under Section 80C of the Income Tax Act. Interest earned and maturity proceeds of PPF are exempted from taxation. The maturity period of PPF is 15 years which can also be extended for 5 years. PPF is one of the safest investment options designed for the long term. However, withdrawals are allowed after 7 years of investment.

Apart from these investment options to save tax, there are many popular investments like Sukanya Samriddhi Yojana, National Savings Certificate and senior citizen saving scheme, etc. Plan your investments today and save taxes. 

How Equity Funds are Better Than Stock Investment?

Most investors know the importance of investing in equity for higher returns and long-term wealth appreciation to achieve various financial goals. However, considering the higher risk involved with the equity asset class, many investors hesitate to invest. If you are a first-time investor in equity, it is quite common to have a question in mind about whether to invest in equity funds or in stocks/direct equity. Generally, it is difficult to say which is better – equity funds or stocks? Both the investment avenues have some unique benefits and drawbacks. Depending on your unique requirement, suitability may vary. Let’s compare both options so that you choose the best suitable investment option for you. 

Understanding the basics – Equity funds and Stock

Equity funds are the type of mutual funds that invest the majority of the investor’s corpus into the portfolio of stocks. There are various types of equity mutual funds available for investment such as large-cap mutual funds, small-cap funds, mid-cap funds, thematic funds, sectoral funds, equity-linked savings schemes (ELSS), etc. Each fund type is designed for a different set of investors with varying risk and investment needs. On the other hand, investing in stocks is a direct investment into a share of a company or taking part in the ownership of a business. Investing in stocks requires you to do intensive research and it involves relatively greater risk than equity funds as funds are managed by professionals and experts. Now, let’s take a comparative look at both these investment options based on various parameters to help you make an informed choice.

ParametersEquity FundsStocks
Professional managementEquity mutual funds offer you the benefit of professional management. The fund management team does extensive research on the stocks to be included in the fund’s portfolio, sectors, and the overall economy. The fund manager constantly monitors the performance of the fund and works on risk management. For example, a large-cap mutual funds portfolio is constituted by a thorough study of large-cap stocks and economic scenarios. While investing in stock, you need to spend a considerable amount of time on market research to pick the right stocks for you. Even with expert advice, managing risk you need to put in a lot of effort to understand the market scenarios and analysis. 
DiversificationAs mutual funds pool the money from various investors and invest them in stocks of 30-50 various companies, the concentration risk in the investment is reduced to provide the benefit of diversification. Mainly, equity funds offer diversification for your investment that is as small as INR 500.When you constitute a stock portfolio, you may invest in 12 to 15 stocks for diversification. However, to diversify you need to invest in a larger amount.
CostEquity mutual funds are cost-efficient options as most of the funds come with an expense ratio that is relatively lower, which will have an impact on end returns. Investing in direct equity involves a variety of expenses and charges such as brokerage, GST, STT, etc.
Diverse optionsThere are mutual funds for every type of investor. There are a wide variety of equity funds available for investors such as large-cap mutual funds, multi-cap funds, mid-cap funds, ELSS, international funds, ETFs, etc. which you can choose based on your investing style, risk profile, and investment needs.Though there are thousands of stocks available to buy from various sectors and industries, you need to choose the best 10-12 among them to build your diversified equity portfolio. You will not have a customized option to choose from.
Risk and returnEquity funds also carry risk. However, the risk may vary from moderate to high depending on the funds you choose. Equity funds have the potential to deliver higher risk-adjusted returns over the long run.Stocks carry greater risk and greater potential to gain/loss on it.
FlexibilityMutual funds allow you to invest a lump sum and as well a small amount in a disciplined manner through SIPs.Stocks require you to invest in lumpsum.


Additionally, investing in ELSS equity funds can help you save tax under Section 80C of the IT Act. If you are a first-time investor looking to save small amounts every month, equity funds can be a better option than stocks. Both the options have pros and cons. It is important to choose the investment option based on your unique need, financial goal, and risk profile. 

How is the RD amount calculated for payment on maturity?

A recurring deposit, or RD, as it is more commonly called, is a type of investment where you invest a fixed sum of money at a fixed rate of interest for a fixed duration of time. This makes it easier for you to know exactly how much you stand to receive as the maturity amount when the RD term ends. There are online tools that you can use to calculate this amount. The RD calculator online is free and easy to use. Read on to know more.

How does an RD calculator work? 

When opening a recurring deposit account with a bank in India, you will need to use an RD calculator online to see what your earnings will be when the investment matures. The calculator is very easy to use and is available on all the websites of the banks which offer RDs as investments. 

To use an RD calculator, you just have to feed in the principal amount you want to invest, along with the duration of the RD. banks offer a fixed rate of interest on RDs, so you get to know the maturity payment instantly. 

Advantages of opening an RD

A recurring deposit is a very popular form of investment in India. It is a safe and easy-to-understand investment tool that gives you fixed returns. Some of the advantages of opening an RD include:

  • Low principal –
    An RD can be opened with an amount as low as INR 10. This is a huge advantage, as people from all walks of life can invest in an RD and earn assured returns. You need to deposit small sums of money periodically to build up the RD fund.
  • Flexible duration  –
    The duration of the RD can be between six months and 10 years. This is very flexible and it allows you to choose the duration that you are comfortable investing for.
  • Low risk –
    As stated, an RD offers fixed returns, so the risk factor is completely negated when you invest your money in a recurring deposit. It is much safer than the riskier financial investment tools such as shares and equities. 

These are the advantages that make the RD a preferred choice of investment for many people, especially those who do not like taking risks with their money.

RD vs FD

Both, a fixed deposit and a recurring deposit offer safe returns and allow your wealth to grow in an assured manner. However, there is one major difference between a fixed deposit and a recurring deposit. In a fixed deposit, you pay a lump sum amount of money as the principal and it earns the dividends for a fixed period of time. 

In a recurring deposit, you need to deposit sums of money periodically in the RD account. In other words, the total principal invested is broken up into smaller instalments and paid into the RD that is already created.

When it comes to RD vs FD, you get to see some similarities. However, the mode of principal payment is the main difference. You need to see how much you can invest, and when you can invest it, and then decide upon an FD or an RD. 

In conclusion

When it comes to RD vs FD, you can see that there are some very distinct differences between the two. Use an FD or RD calculator online to see what type of earnings you can have from both and then select the investment that is better suited for you. Invest your money in a safe and secure way and earn the returns that you are entitled to.

Top 10 Mutual Funds for SIP to invest in 2021

Systematic Investment Plans (SIPs) allow you to invest in mutual funds in the most affordable manner. You can start your mutual fund investments with as little as Rs.500 every month and build up a corpus over time. Through SIPs, you get the benefit of rupee cost averaging and you don’t have to time the market. Moreover, the compounding of returns also creates a considerable corpus if you give your investments time.

Given these benefits, SIPs have become quite popular among investors. If you are also looking to invest in mutual funds through the SIP route, here are the 10 best mutual funds in India that you can choose –

  1. Quant Active Fund

This is a multi-cap equity fund that has given the best returns in its category and has an AUM of Rs.260 crores as of 31st March 2021.

  1. Parag Parikh Flexi Cap Fund

A multi-cap fund, the fund boasts of an AUM of Rs.8182 crores as of 31st March 2021. The expense ratio is 0.95% and the benchmark index is Nifty 500 TRI.

  1. Mirae Asset Emerging Bluechip Fund

It is a large and mid-cap equity fund with an expense ratio of 0.64% and an AUM of Rs.16, 190 crores as of 31st March 2021.

  1. Axis Focused 25 Fund

This is a focused fund which invests in 25 hand-picked stocks which have the potential to generate the best returns.

  1. Quant Tax Plan

An ELSS scheme for tax saving, the fund has an AUM of Rs.106 crores as of 31st March 2021 and a low expense ratio of 0.57%.

  1. Nippon India Pharma Fund

A sectoral equity fund, the fund invests primarily in stocks and securities of the pharmaceutical companies in India. The expense ratio is 0.82% only.

  1. Edelweiss Greater China Equity Offshore Fund

An international fund was earlier called the JP Morgan JF Greater China Equity Offshore Fund. The fund has given attractive returns since its inception.

  1. ICICI Prudential Technology Fund

Another sectoral mutual fund, this fund invests in technology stocks that have been growing due to the technological advancements in the country.

  1. Quant Infrastructure Fund

An infrastructure fund, the fund was launched on 1st January 2013 and has been a top performer among its peer group ever since.

  1. Axis Small Cap Fund

This is a small-cap mutual fund which follows the benchmark of Nifty Free Float Smallcap 100 TRI.

The returns of these funds are given below which show why they are considered to be the best mutual funds in India

Name of the fund1-year return*3-year return*5-year return*
Quant Active Fund108.54%23.02%21.35%
Parag Parikh Flexi Cap Fund73.95%20.69%19.67%
Mirae Asset Emerging Bluechip Fund73.53%17.88%21.86%
Axis Focused 25 Fund56.6%13.06%18.65%
Quant Tax Plan 118.93%25.05%23.34%
Nippon India Pharma Fund54.01%25.84%16.65%
Edelweiss Greater China Equity Offshore Fund66.33%27.47%27.08%
ICICI Prudential Technology Fund125.62%28.54%22.87%
Quant Infrastructure Fund136.42%17.84%19.41%
Axis Small Cap Fund79.14%19.16%19.71%

*as of 3rd May 2021

(Source: https://www.etmoney.com/mutual-funds/featured/best-sip-funds/18) Pick one or more of these best mutual funds in India to invest in 2021. Pick different schemes when you invest in mutual funds to build up a diversified portfolio for maximum returns.

What are the best long-term mutual funds to invest in?

Mutual funds have gained a lot of popularity over the last few years. Financial experts aggressively advise people to invest in these funds. Mutual funds have a certain amount of risk associated with them, but they also offer pretty substantial returns. Due to this risk factor, it is highly advisable for investors to stay invested in mutual funds for longer periods of time.

Mutual funds investments that are of five or more years are known as long-term investments. The duration of the investment is important, but it is perhaps more important to invest in a good mutual fund.

There are different ways to choose an equity mutual fund, such as:

  1. By Market Capitalization
    1. Large Cap Funds that Invests in Top 100 stocks of the Sensex
    2. Mid Cap Funds that Invests in the Next 150 stocks of the Sensex
    3. Small-Cap Funds that Invests in the Next 150 stocks of the Sensex
    4. Large & Midcap Funds that Invests in Top 250 stocks of the Sensex
  2. By Diversification
    1. International Funds, that Invests in the world’s best stocks
    2. Multi-Cap Funds that Invests in companies across market capitalisation 
    3. Focused Funds that Invests in the best stocks in a particular industry or segment
    4. Value-Oriented Funds that Invests in stocks that are currently under-valued but have a high potential of growth 
  3. By Sector & Themes
    1. Thematic-Dividend Yield Funds that Invests in stocks that pay a high and regular dividend
    2. Sectoral Funds: Sector-specific funds like banking, technology, Infrastructure, Pharma, PSU, MNC, Energy, ESG, etc. 
  4. By Solutions
    1. Retirement Scheme
    2. Tax Saving Scheme or Equity Linked Saving Scheme (ELSS) where the money invested is tax-free up to Rs 1.5 lakhs a year U/s 80C

Most equity mutual funds if invested according to your financial goals can be for the long-term. To choose a few from them, let’s stick to diversified funds such as:

  1. ICICI Prudential Bluechip Fund

The ICICI Prudential Bluechip Fund is one of the most sought after types of mutual funds in India, i.e, large-cap blue-chip funds. It has performed very well over the years and has seen upward growth, which has led to the investors earning high yields. The fund is managed by experienced managers who ensure the fund’s growing success and in turn, guarantee your investment to be successful as well.   

  1. Mirae Asset Emerging Bluechip Fund

If you are really interested in going for the blue-chip mutual funds, another excellent option is the   Mirae Asset Emerging Bluechip Fund. it is a great option when you are looking to stay invested for the long term. The fun gives options for large-cap as well as mid-cap fund investments. This find has also had an impressive growth record and continues to grow, helping the investors to earn high dividends.

  1. AXIS Focus 25 Fund

The AXIS Focus 25 Fund is another good blue-chip mutual fund that invests in equities of around 25 companies, which are all large-cap companies. The fund is managed by able fund managers who do a lot of research to ensure the fund keeps growing and the investors receive the correct and highest possible yields.

  1. L&T Midcap Fund

A mid-cap fund is one of the most popular types of mutual funds in India presently. Mid-cap funds, as the name suggests, invest in mid-cap companies listed between the 101st to the 250th largest companies listed in India. These companies are growing and hold the potential to become the largest companies in the country in the near future. One good example of this is the L&T Midcap Fund. The L&T Midcap Fund is an excellent option because the fund has performed consistently over the last few years and this is a pointer towards its future prospects as well.

  1. Tata Retirement Savings Fund

If you want to invest in a mutual fund with the sole purpose of securing your retirement years, the Tata Retirement Savings Fund will be a great option for you. It is a specially designed hybrid fund that helps aggressive investors. You get long term capital gains from this investment and so it proved to be a very good option when compared to the traditional pension saving schemes. The fund has consistently performed well over the years and is managed by the top industry experts, ensuring your investment will be safe and profitable.

In a nutshell
 When you invest in the different types of mutual funds, you get many benefits. From high returns to creating substantial funds for your future, there indeed is a lot to expect from the mutual funds investment. However, you need to be aware of the risks too. Do your research, speak to a financial expert, understand how the mutual funds work and then start your investments. Never be in a rush as even a small mistake in your investment can prove to be costly later on. Thankfully, there are many safe and reliable methods in which this investment can be done and so you should not hold back from investing in the best long-term mutual funds. 

Best RD Interest Rates in India & How is the RD amount Calculated?

A recurring deposit, or an RD as it is better known, is a very popular form of investment in India. It is a safe and low-risk investment that promises to fetch the investor some fixed returns. There are several other benefits that you get when you start an RD and this is why you should definitely consider adding a few recurring deposits to your financial portfolio. But how to ensure you get the best RD interest rate? It is quite simple – you just need to compare the RD rates of the different banks and NBFCs and you will know where to invest. Also, you can use an RD calculator online to know the RD amount. Read on to know more.

What is the best interest rate for RDs? 

The different banks and NBFCs offer different RD interest rates. For example, the Jana Small Finance Bank offers an interest rate of 7.5% on the RD with a tenure of 36 months. The same bank increases the tenure to 8% if the investor is a senior citizen. HDFC Bank on the other hand offers an RD interest rate of 5.5% on RDs of 90 months or more.

As you can see, the RD rates are quite different from bank to bank. Also, this rate is dependent on other factors such as the tenure of the recurring deposit investment. You get some very good rates of interest on your RD investment when you stay invested for a longer period of time. This is why you should do your research and also use an RD calculator online to see which bank offers the best rate and returns.

How to use an RD calculator?

To use an RD calculator online, you need to enter the following details:

  • Enter the monthly investment volume (in INR)
  • Enter the duration for which you want to have the RD
  • Enter the expected rate of return

Once you do this, the calculator will quickly show you the results and you can understand what the RD returns would look like.

Advantages of getting a good interest rate on your RD investment 

Now, let us understand why you need to research and find the best RD interest rate:

  1. Helps to fetch higher returns –
    If your recurring deposit earns higher interest, you will automatically receive a higher return from the investment. This will help you to make effective investments and you will be successful in your RD.
  2. Helps to reach financial goals –
    Every investment is made keeping a financial goal in mind. For example, you may start an RD to pay for your child’s college admission in a few year’s time. If you have an RD that brings in high interest, you will be able to successfully pay the fees and get your child enrolled in the best university.
  3. Helps to make a sound investment –
    And finally, you get to make the best investment when your RD fetches the highest possible interest.

As you can see, these are very handy benefits that you get when you open a recurring deposit with a healthy rate of interest.

The bottom line

A recurring deposit is a very beneficial and safe type of investment. You should definitely consider getting a good RD from a good bank or NBFC. However, make sure you settle for a good rate of interest on the RD. Also, remember to use an RD calculator to see how fruitful your investment is going to be. If you take care of these simple things, you will be able to make a very good RD investment and then you will proudly reap the highest yields.

Which SIP Gives Highest Returns?

If you are new to investments and mutual funds is what tops your list, starting with SIP helps you make investment a habit. In a Systematic Investment Plan (SIP), you invest a small amount of money in a mutual fund of your choice on a routine basis. A specific sum of money is deducted from your bank account at predetermined intervals and gets invested in a selected mutual fund scheme. You can choose the frequency of SIP investment that you are convenient with—weekly, monthly or quarterly.  This flexibility associated with SIP makes it quite a sought after mode of mutual fund investment amongst the rookies.

Who is more likely to invest in SIP mutual funds?

  • If you are a first-time investor
  • If you have thought about investing in an equity-linked investment only recently
  • If you have just started your career and do not have a huge sum at your disposal

Why is it better to invest in SIP mutual funds?

SIP investment is in demand, mostly amongst the first-time investors for a number of reasons:

  • Rupee Cost Averaging:
    Mutual funds are subject to market risks. You buy less units when there is a bullish trend and buy more units in the bear market. This way you reduce the cost per unit and, in turn, the overall cost of investment. There is no need to time the market.
  • Low Invest:
    For beginners, you can start by investing in SIP a monthly standard amount of Rs.500. Some funds even let you invest as low as Rs.100 per month.
  • Flexibility:
    You are completely at liberty to start or stop SIP at any point in time. The fund houses have no say whatsoever. You can run more than one SIPs simultaneously. You can choose the frequency of SIP at your convenience.
  • Makes investment a habit:
    SIP creates a habit of regular investment. Under the automated payment option, a fixed amount is deducted from your bank account at predetermined intervals and gets invested in a selected mutual fund scheme.
  • Power of compounding: You get better returns in SIP by means of the power of compounding.
  • Higher returns:
    You get higher returns in SIP as compared to bank FDs, PPF or other conventional investments.

Types of SIP mutual funds:

  • Top-up SIP:
    Here, the investment amount can escalate on a regular interval depending on how well that particular mutual fund scheme is faring. This way, you get an edge by increasing your SIP amount on schemes that are performing well.
  • Flexible SIP:
    You can increase or decrease the investment amount here. Under the shoestring budget, you either cut back on a few instalments or skip it entirely for a few months. Inversely, you can increase the investment amount when you have a considerable amount at your disposal.
  • Perpetual SIP:
    When there is no end-date associated with your SIP investment, you are free to close your SIP as deemed fit. This type of SIP is known as Perpetual SIP.
  • Trigger SIP:
    It is considered to be the best mutual funds for SIP for seasoned investors. They choose their own index level, NAV or a start-date for SIP.

Criteria for choosing the best SIP plans:

  • Fund house reputation:
    Reputation of the fund house is crucial while selecting the best mutual funds for SIP. Choose a fund house that has tactfully handled the lows and highs of the market. A good fund house will not let the see-sawing market scenario exert influence on their investors.
  • Value of assets under management:
    The asset size of Rs.500 crore acts as a standard criterion for choosing a fund.
  • SIP duration:
    The more the duration of your SIP the more are the chances that your investment grows to a considerable amount.
  • Stability of the fund:
    Evaluate the performance (in terms of the return) of the fund you want to choose over the last three to five years. This would give you an idea of the stability of the fund.
  • Know your risk-appetite:
    If you have a high-risk appetite, go for equity funds. For a low-risk appetite, debt funds are a better option.

What are the best SIP plans in 2021?

If you consider SIP investment in 2021, you would want to do a bit of market research. As far as equity funds are concerned, for a 5-year performance, ICICI Prudential Technology Fund offered a 27.95% return and SBI Small Cap Fund offered a 12.83% return. In debt funds, Aditya Birla Sun Life Digital India Fund offered 27.01% and ICICI Prudential Multicap Fund offered a 9.17% return as per the 5-year performance. Choose the best mutual funds for SIP after thorough research.

Conclusion:Returns on SIP depend on how different funds are performing and how a fund manager is balancing the market fluctuation. Choose the best SIP plans based on these factors.

Can I buy mutual funds today and sell tomorrow

Starting from instant noodles to instant money transfer, instant is the new normal—the need of the hour. Why should the money market hang behind? If you want to redeem their money from the market almost instantly, the Securities and Exchange Board of India (SEBI) has introduced a new type of debt funds called overnight funds in 2018.

Ever since there has been a rising demand for overnight mutual funds among those who have a very short investment horizon. These funds are also widely known for being investor-friendly, where you buy mutual funds today and sell them tomorrow.

What are overnight mutual funds?

Overnight mutual funds are a type of open-ended debt funds where you invest your money primarily in overnight assets and securities. You, as an investor, can simply enter and exit an overnight mutual fund within the trading session (9.15hrs-15.30hrs). When a business day begins, the funds are held in cash.  Your fund manager invests in bonds that mature the very next day, that is, matures overnight. This may go on in a circle.

How do overnight funds function?

The two most important aspects as far as overnight fund operation is concerned are as follows:

  • Where to invest

According to SEBI, you can only invest in funds and assets that mature in one day, like collateralized borrowing and lending obligations (CBLOs), overnight reverse repos and other debt/ money market securities. An overnight fund portfolio undergoes changes every single day, incorporating new overnight securities. Here, you cannot invest in deposits or risky debt instruments. The overall asset holding of such a fund is categorised as “Cash and Cash Equivalents”.

  • How to earn

The securities that the fund holds mature overnight. Hence, you cannot earn capital gains by investing in overnight mutual funds. Here, you only receive the interest paid on your debt holdings. Returns on overnight funds show the lending and borrowing rates generated in one day. The rates and conditions in the overnight market for funds determine the returns of overnight funds. 

Features of overnight funds:

The main objective of an overnight fund is to help investors put the excess cash to better use without risking too much. The following features of this fund help achieve this goal:

  • Very short investment horizon
  • The significantly low exposure to risk
  • Buy and sell funds in no time leads to high liquidity

Why trade in overnight funds?

Is it a good time to invest in mutual funds when the market is more volatile than ever? The answer could be yes if it is an overnight fund, because: 

  • When you invest in securities that mature overnight, you do not make any capital gain or loss. Also, these securities hardly renege on interest payments. Hence, their credit risk is almost nil. If you have a low-risk appetite, overnight funds are the best mutual funds to buy now. 
  • A majority of the overnight funds incur an expense ratio below 1%. They are, therefore, considered low-cost.
  • With overnight funds, you are free to enter and exit the investment at your convenience. It, thus, offers flexibility.

So, if you have a query, is it a good time to invest in mutual funds you need to do your research properly.

Who trades in overnight funds?

You may want to buy mutual funds that mature overnight if you:

  • have a very short investment horizon
  • want a risk-free breathing space before you shift investments to equity funds

What are the best mutual funds to buy now?

In case you aren’t sure what are the best mutual funds to buy now, the following criteria may help you choose:

  • A week’s or a month’s return performance of the fund
  • The less the expense ratio the more the return

Overnight funds and taxation:

Tax levied on overnight funds is similar to that of debt funds. If the fund is given up before the completion of three years, the units of that fund are subjected to short-term capital gain tax. In case the fund is held for more than three years, the units are subjected to a long-term capital gain tax at 20%. Dividends are taxed based on income bracket.

Conclusion: Overnight funds allow investors to utilise the excess cash that they have at their disposal in a better and more cost-effective way. However, the only factor to invest should not be your consideration if is it a good time to invest in mutual funds. You can invest in overnight funds if you wish to park it for a short period, even if that means for a day or the weekend only.

Create your website with WordPress.com
Get started