Best SIP plans for 5 years - Top SIP Mutual Funds To Invest

Buying the best SIP plans for 5 years is a wise decision to grow the wealth. A systematic investment plan (SIP) is a popular investment option for individuals who want to invest a fixed amount of money regularly over a period of time. SIPs are a low-risk investment option that provides good returns over the long term. 

In this article, we will discuss the best SIP plans for 5 years investment in 2023. These plans are carefully selected based on their historical performance, fund manager experience, and overall market trends. By investing in these SIP plans, you can ensure a steady growth of your investment portfolio over the next 5 years.

What is the Best SIP Plans?

A SIP (Systematic Investment Plan) is a type of investment plan offered by mutual funds in which investors can invest a fixed amount of money at regular intervals, typically every month. You can start investing as small as Rs. 100 in Mutual Funds, and SIPs allow investors to invest in a disciplined and systematic manner, helping them to accumulate wealth over a period of time. 

The investment amount is deducted from the investor's bank account and invested in the mutual fund scheme chosen by the investor. SIP plans are popular among retail investors as they offer flexibility, convenience, and the potential for long-term wealth creation.

How does Mutual Fund SIP Work?

A Systematic Investment Plan (SIP) is a method of investing in mutual funds that allows investors to contribute a fixed amount of money at regular intervals, typically monthly. Here's how Mutual Fund SIP works:

• Choose a Fund: Select a mutual fund scheme that aligns with your financial goals. Mutual funds can vary in terms of their investment objectives, such as equity funds for capital appreciation, debt funds for stability, or hybrid funds for a mix of both.

• Choose SIP Amount: Decide on the amount you want to invest through SIP. This can be a relatively small sum, making it accessible for investors with varying budgets.

• Frequency of Investments: Choose the frequency at which you want to invest. SIPs commonly offer monthly investment options, but some funds may allow quarterly or even weekly. 

• Provide Bank Mandate: Link your bank account to the SIP for automatic debits. This ensures a seamless transfer of funds from your bank account to the mutual fund scheme on the predetermined dates.

• Allotment of Units: On each SIP date, the mutual fund company calculates the applicable Net Asset Value (NAV) of the fund. The NAV is the per-unit market value of the mutual fund on a specific date.

List of Best SIP Plans for 5 Years in Equity Funds

Best SIP plans for 5 years in equity funds refer to a group of mutual fund schemes that have consistently delivered high returns over five years. Below is the list of Top SIP Plans for 5 Years in Equity Funds which you can look up before deciding on future investments.

Best SIP Plans for 5 Years in Equity Funds

Equity funds are known for their high returns but the drawback is that it has more risk compared to debt funds. This type of fund can be a good option for those investors looking for a high return on investment option. Here, we have mentioned a list of some top-performing equity funds suitable for a Systematic Investment Plan (SIP).

1. Quant Small Cap Fund Direct Plan-Growth

Quant Small Cap Fund Direct Plan-Growth is an attractive option for medium to short-term investors. It has shown a growth rate of 67.91% in 3 years, making it appealing to those with a shorter investment period. For a more extended period, the 5-year growth rate is 22.49%.

2. Tata Digital India Fund Direct-Growth

Tata Digital India Fund Direct-Growth is an equity mutual fund provided by Tata Mutual Fund. This fund is currently managed by Fund Manager Meeta Shetty. With a current expense ratio of 0.31%, it is classified as an open-end fund. The fund has an impressive Asset Under Management (AUM) of INR 6,765.81 crores, reflecting the trust and investments of its participants.

3. ICICI Prudential Technology Direct Plan-Growth

ICICI Prudential Technology Direct Plan-Growth shows an impressive average growth rate of 51.73% over the past 3 years. For those with a more extended investment period, the fund gives the rate of returns at 21.60% over 5 years. With a minimum investment requirement of INR 100, it offers accessibility for investors at various levels.

4. SBI Technology Opportunities Fund Direct-Growth

SBI Technology Opportunities Fund Direct-Growth gives a 36.75% rate of returns over 3 years and a steady 20.84% growth rate over 5 years. For potential investors, starting a SIP with just INR 500 per month for at least 3 years can maximize returns. The total fund size of the SBI Technology Opportunities Fund Direct-Growth is INR 2861.77 crores.

5. Aditya Birla Sun Life Digital India Fund Direct-Growth

Aditya Birla Sun Life Digital India Fund Direct-Growth, in existence for over a decade since its launch on 01/01/2013, has an impressive track record. Currently managing INR 3,338.13 crores in assets, the fund maintains an expense ratio of 0.88%. Over the last 3 years, it gives the rate of return at 40.10%.

List of Best SIP Plans for 5 Years in Debt Funds 

Best SIP plans for 5 years in debt funds refer to a group of mutual fund schemes that have consistently delivered superior returns over five years while investing in debt instruments. Below is the list of Best SIP Plans for 5 Years in Debt Funds which you can look up before deciding on future investments.

Best SIP Plans for 5 Years in Debt Funds

Debt funds are known for their safety but the drawback is that provide less returns compared to equity funds. This type of fund can be a good option for those investors looking for a safe and best investment option. Here, we have mentioned a list of some top-performing debt funds suitable for a Systematic Investment Plan (SIP).

1. DSP Government Securities Direct Plan-Growth

DSP Government Securities Direct Plan-Growth, part of DSP Mutual Fund's offerings, is a Gilt mutual fund scheme. With a history spanning over ten years since its launch on 01/01/2013, the fund has established itself in the market and has an expense ratio of 0.54%. Over the past 3 years, the fund has given a 5.88% rate of return, and over 5 years, it has even stronger performance with an 8.34% rate of return. 

2. Aditya Birla Sun Life Medium Term Direct Plan-Growth 

Aditya Birla Sun Life Medium Term Direct Plan-Growth is a mutual fund scheme categorized as medium-duration and manages INR 1,643 crore of assets. With a 14.17% rate of return over the past 3 years and an 8.57% rate of return over 5 years, the fund demonstrates a consistent performance. This performance, combined with its medium-term focus, positions Aditya Birla Sun Life Medium Term Direct Plan-Growth as an option for investors seeking a balanced approach to growing wealth within a moderate duration.

3. Bandhan Government Securities Investment Plan Direct-Growth

Bandhan Government Securities Investment Plan Direct-Growth holds the majority of its portfolio in Government of India (GOI) securities. This plan gives the annual rate of return at 8.83% and manages INR 1410 crores of assets. 

Over the past 3 years, it has given a 5.69% rate of return and an 8.39% rate of return over 5 years. These performance metrics, with its strategic investment focus, position Bandhan Government Securities Investment Plan Direct-Growth as a competitive option in the market.

4. ICICI Prudential Constant Maturity Gilt Fund Direct-Growth

ICICI Prudential Constant Maturity Gilt Fund Direct-Growth stands out as a compelling choice, for investors seeking a steady and secure investment option. This gilt fund, as the name suggests, invests primarily in Government of India (GOI) securities, ensuring the safety and stability of its portfolio.

With a proven track record of consistent performance, ICICI Prudential Constant Maturity Gilt Fund Direct-Growth has delivered an annualized return of 8.83% over the past three years and an impressive 8.39% over the past five years. This consistent performance, coupled with its strategic focus on government securities, positions this fund as a reliable and competitive option in the market.

5. IDFC Government Securities Fund Constant Maturity Direct-Growth

IDFC Government Securities Fund Constant Maturity Direct-Growth stands out as a trustworthy investment choice for those seeking stability and security in their investment portfolio. This gilt fund primarily invests in Government of India (GOI) securities, ensuring the safety and stability of its holdings.

With a demonstrable history of consistent performance, IDFC Government Securities Fund Constant Maturity Direct-Growth has consistently delivered an annualized return of 8.83% over the past three years and an impressive 8.39% over the past five years. This unwavering performance, coupled with its strategic focus on government securities, positions this fund as a reliable and competitive option in the market.

Why do you Invest through SIP?

Systematic Investment Plan (SIP) is a disciplined and convenient way to invest in mutual funds. Here are several reasons why individuals opt for SIP as an investment strategy:

• Affordability and Flexibility: SIP allows investors to start with a relatively small amount, making it accessible to a wide range of individuals. You can invest a fixed amount at regular intervals (monthly or quarterly), aligning with your financial capacity and goals.

• Rupee Cost Averaging: SIP follows the principle of rupee cost averaging. Since you invest a fixed amount regularly, you buy more units when prices are lower and fewer units when prices are higher. This helps average out the cost per unit over time, reducing the impact of market volatility.

• Power of Compounding: SIP has the power of compounding. As your investments generate returns, these returns are reinvested, leading to the potential for exponential growth over time. The longer you stay invested in the mutual fund plans, the more you get the compounding effect.

• Automatic Deductions: SIPs can be set up with automatic deductions from your bank account, ensuring that you stay committed to your investment plan without the need for manual intervention. This automated process adds to the convenience of SIP investing.

• Professional Fund Management: SIP investors get the benefit from professional fund management. Fund managers make investment decisions based on extensive research and analysis, helping investors leverage the expertise of financial professionals.

• Liquidity: SIP provides liquidity as investors can redeem their units at any time, offering flexibility to meet unexpected financial needs.

Tax Implications of SIPs

Investing in Mutual Funds through Systematic Investment Plans (SIPs) is no doubt the best way to grow your income, but understanding the associated tax implications is equally crucial for informed decision-making.

All gains from Mutual Fund investments are categorized as Capital Gains. The classification into ‘Short-Term Capital Gains (STCG)’ and ‘Long-Term Capital Gains (LTCG)’ is determined by the type of fund and the duration of the investment.

Taxes on Equity Funds

For equity funds, if the units are held for more than 12 months, the gains are considered Long-Term Capital Gains (LTCG) for taxation purposes. If the holding period is less than 12 months, the gains are treated as Short-Term Capital Gains (STCG).

Taxation of Equity-Oriented Mutual Funds:

1. LTCG on equity funds is tax-free up to Rs. 1 lakh every financial year.

2. LTCG over Rs. 1 lakh per year is taxed at a flat rate of 10%.

3. STCG on equity funds is taxed at 15%.

Taxes on Debt Funds:

For debt funds, the units must be held for a period exceeding 36 months to qualify for LTCG taxation. If the holding duration is 36 months or less, the gains are treated as STCG.

Taxation of Debt Mutual Funds:

1. LTCG on debt funds is taxed at 20% with the benefit of indexation.

2. STCG on debt funds is taxed according to the investor's applicable income tax slab.

How Do I Choose a Good SIP Plan?

Choosing a good Systematic Investment Plan (SIP) requires careful consideration of various factors to align with your financial goals, risk tolerance, and investment preferences. Here are some steps to help you choose a suitable SIP plan:

1. Define Your Financial Goals: Clearly define your financial goals. Whether you are saving for a short-term goal like a vacation or a long-term goal like retirement, having a clear purpose will guide your investment decisions.

2. Identify Your Risk Tolerance: Check your risk tolerance and investment period. Different SIP plans cater to varying risk profiles. If you can handle market fluctuations and have a longer investment period, you might consider equity-oriented funds. 

3. Understand Fund Categories: Get an understanding of different categories of mutual funds, including equity funds, debt funds, hybrid funds, and others. Each category serves a specific purpose, and your choice should align with your financial goals.

4. Research Fund Performance: Analyze the historical performance of the funds you are considering. Look for consistency in returns over various market cycles. However, past performance is not a guarantee for future results, so consider other factors as well.

5. Expense Ratio: The expense ratio is the annual fee charged by the mutual fund for managing your investments. Lower expense ratios are generally more favorable for investors, as they can have a significant impact on overall returns.

6. Fund Manager’s Track Record: Check the track record and experience of the fund manager. A skilled and experienced fund manager can play a crucial role in the fund's performance.

7. Fund Size: While a large fund size can indicate investor confidence, it's essential to consider the fund's size about its investment strategy. Extremely large funds might face challenges in deploying capital efficiently.

8. Check Exit Load and Lock-In Periods: Be aware of exit loads and lock-in periods associated with the SIP plans. Exit loads are fees charged when you redeem your investment before a specified period.

How to Buy Investment Plans from Okbima?

It is very easy to buy the best SIP plans for 5 years with our user-friendly website Okbima. Here is a step-by-step process of how you can buy it:

Step 1: Firstly you visit  Okbima's official website.

Step 2: Then click on the "Investment Plans" icon, and fill in the basic details.

Step 3: Compare and choose the different investment options based on your needs and complete the payment process.

Step 4: Once payment is completed, investment details will be sent to your registered email ID.

Conclusion

In conclusion, for a longer investment period, choosing the best SIP plans for 5 years is crucial to diversifying the market risk. Equity-oriented SIPs, like diversified equity or large-cap funds, suit those with higher risk tolerance and a longer time. Alternatively, short-term debt funds or ultra-short-term funds provide capital preservation. 

Prioritize consistency in performance, and evaluate the fund manager's track record and expense ratio. Regularly review and adjust your portfolio based on changing goals and market conditions. 

FAQs

Which type of SIP mutual fund is most suitable for an investor?

The most suitable SIP mutual fund depends on the investor's financial goals, risk tolerance, and investment horizon. Consult with a financial advisor for personalized advice.

How much rate of return does SBI Magnum Gilt Fund offer in 3 and 5 years?

For specific return information, refer to the latest performance reports of SBI Magnum Gilt Fund. However, past performance does not guarantee future results.

What is a SIP calculator?

A SIP calculator is a tool that helps investors estimate potential returns on their Systematic Investment Plan (SIP) investments, factoring in variables like investment amount, duration, and expected rate of return.

What is the best SIP plan for 5 year investment in 2023?

Identifying the best SIP plan for 5 years in 2023 requires considering individual financial goals and risk tolerance. Research top-performing funds, assess market conditions, and consult financial experts for guidance.

Which is the best sip plan for 3 years?

The best SIP plan for 3 years varies based on individual preferences and market conditions. Research and consider factors like fund performance, expense ratio, and investment strategy.

For SIP, which plan is best?

The best SIP plan depends on your investment objectives. Analyze fund performance, risk factors, and expense ratios to make an informed decision aligned with your financial goals.

What is the best short-term investment plan?

The best short-term investment plan depends on your risk tolerance and financial goals. Explore options like liquid funds, short-term bonds, and fixed deposits for suitable choices.