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Investment in mutual funds through SIP (Systematic Investment Plan) is considered one of the safest ways of investment by managing risk and earning profit. For long-term and short-term SIPs, various plans are available. But which SIP plan is best and offers high returns and security? Especially when considering investing for long terms like 3, 5, 7 or 10 years. These kinds of questions often arise in our heads. Don't worry, as you have landed at the right place. Learn about the best SIP plan and start investing.
Best Mutual Fund for a 5-year SIP Plan
The best mutual fund for a 5-year SIP plan often falls in the equity and hybrid fund category. These funds offer higher returns. However, debt funds are a great investment option if you want to invest with higher securities and avoid your invested amount being affected by market fluctuation.
Equity, hybrid, and debt funds are three broad classifications of mutual funds. These various fund types hold different benefits. Before selecting the best fund, you need to understand their differences.
| Parameters | Equity | Debt | Hybrid |
| Get invested in | Stocks of companies | Debt securities and money market instruments | Stocks + Debt Instruments |
| Degree of Risk | High risk | Low risk | Moderate risk |
| Return | Depends on market | Not depends on the market | Partly stable and partly dependent |
| Degree of return | High return | Lower than equity | Return may vary |
| Best Suited to | Investors with long term financial goal and high risk appetite | Investors with a low risk appetite | Investors with mid term financial goal and lower risk appetite |
10 Best SIP to Invest for 5 years (Equity)
| Fund Name | Scheme Asset Size | Expense Ratio | Cash Holding | Minimum Investment | 5 Year Return |
| Quant Small Cap Fund Direct Plan - Growth | ₹ 15,663.84 Cr | 0.77% | 1.47% | ₹ 1,000 | 39.98% |
| Bank of India Small Cap Fund Direct - Growth | ₹ 910.93 Cr | 0.77% | 0.86% | ₹ 1,000 | 33.72% |
| Nippon India Small Cap Fund Direct - Growth | ₹ 45,894.01 Cr | 0.73 % | 3.72 % | ₹ 100 | 32.55% |
| Quant Mid Cap Fund Direct - Growth | ₹ 4857.91 Cr | 0.76% | 2.06% | ₹1,000 | 34.23% |
| ICICI Prudential Small Cap Fund Direct | ₹ 7,455.41 Cr | 0.66% | 11.68% | ₹100 | 30.51% |
| Tata Small Cap Fund Direct - Growth | ₹ 6,125.33 Cr | 0.31% | 5.01% | ₹100 | 30.33% |
| Invesco India Small Cap Fund Direct - Growth | ₹ 3,658.89 Cr | 0.37% | 2.58% | ₹500 | 30.16% |
| Kotak Small Cap Fund Direct - Growth | ₹ 14,425.52 Cr | 0.43% | 5.76% | ₹100 | 29.60% |
| Canara Robeco Small Fund Direct - Growth | ₹ 9,586.09 Cr | 0.48% | 3.87% | ₹1,000 | 29.44% |
| Motilal Oswal Mid Cap Fund Direct - Growth | ₹ 7,972.05 Cr | 0.64% | 3.19% | ₹500 | 28.86% |
10 Best SIP to Invest for 5 years (Hybrid)
| Fund Name | Scheme Asset Size | Expense Ratio | Cash Holding | Minimum Investment | 5 Year return |
| Quant Multi Asset Fund Direct - Growth | ₹ 1,455.83 Cr | 0.71% | 8.87% | ₹1,000 | 28.54% |
| Quant Absolute Fund Direct - Growth | ₹ 1,677.76 Cr | 0.75% | 2.52% | ₹1,000 | 27.01% |
| Bank of India Mid & Small Cap Equity & Debt Fund Direct Growth | ₹636.06 Cr | 1.38% | 4.31% | ₹1,000 | 23.45% |
| ICICI Prudential Equity & Debt Fund Direct Growth | ₹31,196.16 Cr | 1.07% | 6.94% | ₹100 | 22.18% |
| ICICI Prudential Multi Asset Fund Direct Plan - Growth | ₹32,831.03 Cr | 0.84% | 18.26% | ₹100 | 20.82% |
| HDFC Balanced Advantage Fund Direct Plan - Growth | ₹77,011.15 Cr | 0.75% | 12.13% | ₹100 | 20.54% |
| Kotak Multi Asset Allocator FoF - Dynamic Direct - Growth | ₹1,299.04 Cr | 0.30% | 3.16% | ₹100 | 20.35% |
| JM Aggressive Hybrid Fund Direct - Growth | ₹167.39 Cr | 0.61% | 7.22% | ₹100 | 19.85% |
| Edelweiss Aggressive Hybrid Fund Direct - Growth | ₹1,265.88 Cr | 0.21% | 0.20% | ₹100 | 19.34% |
| Kotak Equity Hybrid Fund Direct - Growth | ₹4,917.78 Cr | 0.46% | 5.29% | ₹100 | 19.29% |
10 Best SIP to Invest for 5 years (Debt)
| Fund Name | Scheme Asset Size | Expense Ratio | Cash Holding | Minimum Investment | 5 Year Return |
| Aditya Birla Sun life Medium Term Plan Direct - Growth | ₹ 1,888.86 Cr | 0.85% | 10% | ₹1,000 | 9.43% |
| DSP Gilt Direct Plan - Growth | ₹ 731,31 Cr | 0.56% | 18.32% | ₹100 | 8.78% |
| SBI Magnum Gilt Fund Direct - Growth | ₹ 7,820.70 Cr | 0.47% | 19.32% | ₹500 | 8.76% |
| Bandhan Government Securities Investment Plan Direct - Growth | ₹ 1,499.57 Cr | 0.45% | 2.58% | ₹100 | 8.76% |
| Edelweiss Government Securities Fund Direct - Growth | ₹ 134.60 Cr | 0.49% | 2.16% | ₹100 | 8.68% |
| ICICI Prudential Gilt Fund Direct Plan - Growth | ₹ 4,616.76 Cr | 0.56% | 11.02% | ₹1,000 | 8.57% |
| ICICI Prudential All Seasons Bond Fund Direct Plan - Growth | ₹ 11,698.65 Cr | 0.56% | 22.40% | ₹100 | 8.57% |
| Kotak Gilt Investment Plan - Growth | ₹ 3,044.11 Cr | 0.46% | 9.04% | ₹100 | 8.34% |
| Kotak Gilt Investment PF & Trust Direct - Growth | ₹ 3,044.11 Cr | 0.40% | 9.04% | ₹100 | 8.34% |
| Bandhan Dynamic Bond Fund Direct Plan - Growth | ₹ 2,123.27 Cr | 0.76% | 1.63% | ₹100 | 8.21% |
How to Select Fund For 5 Years SIP Investment
5-years is a long time for many of us. When you consider constant investment in a fund for 5 years with a goal, it requires you to make such a decision that assures you of the funds' safety and returns. So, it's essential to select the right fund before investing. Here, we have listed some crucial factors to consider when choosing the fund for your SIP investment.
1. Consider Your Risk-Bearing Appetite
Indeed, the first step towards your fund selection is your risk-bearing appetite. You must understand your financial status, aptitude towards risk, and capacity to handle it. Your risk-bearing appetite lets you decide which kinds of funds you should invest in equity, debt or hybrid.
2. Identify Your Financial Goal
Your financial goal also helps you identify the right fund; according to the goal, you can choose the fund with high and low returns. For example, if you're investing for retirement, you might want to invest in a safe fund even if there's a low return. Whereas, if you want to buy a house after 5 years, you might want to invest aggressively. Furthermore, if it's about buying a car, you might like to invest in a fund with moderate risk.
3. Explore and Get Fund Information
The vital step towards identifying the best fund is to explore different kinds of funds and learn about them. The primary thing to note is that -
1.NAV
NAV stands for Net Asset Value. It defines the market value per share of a mutual fund. You can check past NAV with the fund's insights. The NAV will determine how much unit you'll get allotted. Let's suppose you're going to start your SIP with Rs. 1000/month. In the first month, the NAV is Rs. 20; then, you'll be allotted 50 units. Next month, the NAV is Rs. 25; you'll get assigned 40 units. The NAV fluctuates with the market, directly affecting profit and loss for your investment.
2.Expense ratio
The expense ratio is the annual charge a mutual fund takes from you for managing the fund. The lower the expense ratio, the better your 5-year investment plan will be.
3.Understand the Fund
It's crucial that before investing, you must know which kind of fund it is. The fund type information will let you know where your investment will stay. The investment will be aggressive or moderate. Here, you can also find the fund's scheme and cash holdings.
4. Analyse Your Portfolio
Your investment portfolio plays a crucial role in defining your investment safety. The diversification in the fund will safeguard your investment. You can identify which SIP fund invests in which companies and sectors and select such a fund that can diversify your investment. A proper balance between risk and safety is the best way to earn profit and ensure financial security.
5. Check the Fund's Past Record
To identify the best long-term fund, you must look at the history of mutual funds. However, the record doesn't ensure the exact future but lets you predict the future in some sense.
Ultimately, always start SIP investment smartly, take past references but don't rely on them, identify the degree of risk, read all the fund information, learn about fund managers and get other crucial details before investing in any fund.
Conclusion
Mutual fund investment for 5 years is one of the great ways to invest in the market with a certain level of benefits and financial safety. It is considered the middle way of investing between stock and traditional fixed deposit. You can select the best five-year SIP plan according to your investment goal, market understanding, portfolio analysis report, budget, and other factors. Various online broking apps let you invest in mutual funds online.
GoPocket is one of the best online trading platforms for SIP investment. The app's user-friendly interface makes it easy to navigate and swipe between stocks, SIPs, IPOS, Future and Options. GoPocket is easing the investment process for every individual.
Disclaimer: Gopocket doesn't promote any funds for investment. Before investing, consider your financial status and risk-bearing appetite and build an understanding of the market.
