Which Is The Best Sip Plan In India - The last two years or so have not been very fruitful for mutual fund investors, although they have continued to pour money into various mutual fund schemes. As a result, the total assets under management (AUM) increased to Rs.27 trillion or 27 lakh crores in November 2019.
Gradually, they realized that investing in mutual funds is for long-term wealth creation and not for short-term gains. This leads to continued investment regardless of market conditions. Every investor should follow this practice without fail.
Which Is The Best Sip Plan In India
In this post, I will discuss 7 best SIP Plans in India to invest in 2020, from where you can find the best SIP to invest in 2020 according to your needs.
Sip And Mutual Funds
There is no such thing as Best SIP Plans or Best SIP to invest in if you judge a fund or scheme only on the basis of returns. It's shocking, isn't it? Yes, this is true and you should know this. The time has come now.
I have many reasons to explain this. If we call a mutual fund scheme the best, then it should remain the best for the next 5, 10 or 15 years. isn't it? But unfortunately, it didn't happen that way.
A fund cannot be on top of the Himalayas for eternity. This doesn't work either. It is quite obvious that the fund will reach a peak and then gradually decline from the peak.
Also, the recent categorization of mutual fund schemes by SEBI has made the idea of the best funds very clear. I have the following reasons to support my submission.
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You may not accept that most of us consider funds to be the best just in terms of return score. But how does that work? Funds may be the best for you to remember last year, but they may not be suitable for a 60-year-old.
I mean for example SBI small cap fund has performed well for the past few years but who would give this fund to a senior citizen for regular income. I really didn't expect it.
Even the best fund managers in the country cannot guarantee the best fund performance in the next 5 or 10 years. If they can not confirm the status of the best, how can we say the best fund? The time has really come for investors to understand the bitter truth.
I do not demoralize you and have no intention of doing so. But the fact is that returns are not the only criteria to be considered, other parameters like risk profile, fund risk opinion, age, financial goals, current financial position, etc.
Best Mutual Funds For Sip In 2021
Be it the best mutual fund for SIP or the best mutual fund next 10 years for you, it might be the worst for someone else.
Technically, if you remain emotional, you should consider mutual fund schemes as the best SIP plans to invest in 2020, only if you compare the schemes based on their common characteristics such as returns, benchmark returns, money risk, risk. Investor profile, time horizon and financial objectives. Each component is equally important for the best status.
Nothing to worry about in the end. Because we all invest in mutual funds to create long-term wealth. Investing in mutual funds using the SIP route only helps us accumulate more units when the market goes down.
You will not find the phenomenon called rupee cost averaging anywhere. But most of you ignore this and do just the opposite of what the experts are asking.
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But those who invest randomly in mutual funds only consider the best status based on the performance of the past years, or for greed for short-term income, eventually fail.
There are many other things to consider while choosing a mutual fund scheme for investment. Time and time again, financial experts advise us to invest for the long term if we want to build sustainable wealth for our future. Those who have linked their investments with their financial goals or objectives need not worry.
A disciplined and systematic approach to long-term wealth creation helps you achieve your goals with ease. Systematic Investment Plan or SIP is a medium for investing even small amounts, which attracts many investors.
Before deciding the best SIP plan to invest in today, let's consider some parameters that are very important to make a decision for the best SIP plan to invest in 2020.
What Is A 'successful' Sip Investment In Equity Mutual Funds?
Alpha is a measure to determine the excess return generated by the fund over and above the average return or benchmark return. It is also seen as a measure of fund manager performance. Alpha can be positive or negative.
This is one of the most important factors for a successful sale. Alpha tells you how well a fund is performing compared to a benchmark or industry average. The higher the alpha, the better the fund.
A low alpha value indicates the worst performance of the fund. Also alpha refers to the risk-adjusted return generated by the fund.
For example, if a mutual fund scheme has an alpha of 4, it mainly means that the fund outperforms the benchmark index by 4%. If the benchmark return is 10%, this fund has returned 14%.
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A positive alpha (+) means that the fund manager is able to generate returns above the expected return and has outperformed compared to the risk profile. Obviously, fund managers should be equally credited.
On the other hand, negative alpha (-) means that the fund cannot generate enough return compared to its risk profile.
Thus, one should choose a mutual fund scheme with a high alpha value because a fund with a high alpha value has the ability to generate returns over and above the benchmark return and also has the potential to return after the market falls.
Beta refers to the volatility or systematic risk of the underlying mutual fund scheme. It also shows the sensitivity of mutual fund schemes to market movements.
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This means how certain funds move in tandem with market movements or swings. Thus, it can be said that beta measures the periodic fluctuations (up or down) of the scheme compared to the periodic fluctuations (up or down) of the index for a given period.
Beta measures the extent to which the underlying fund moves in line with the benchmark index. This factor is also a very critical parameter after alpha to choose the best fund. It always shows the systematic risk that the fund has and how sensitive it is to market movements.
The beta index of the market or benchmark is always considered to be 1. Also, any fund's beta value less than 1 indicates lower volatility and greater than 1 indicates higher volatility than the market index or benchmark.
For example, if a mutual fund scheme Z has a beta value of 0.90, it means price movement, ie for every 1 rise or fall in the market or benchmark index, the value of Z will also rise or fall by 0.90.
Best Sip Mutual Funds
Thus, if the market returns go up or down by 10%, the mutual fund's return will also go up or down by 9%. This indicates that the NAV of the mutual fund scheme will be in line with the market or benchmark index. However, finding the beta value is meaningless if the portfolio does not follow the benchmark.
Thus, the beta value shows the rise or fall of the NAV of a mutual fund compared to its benchmark index, for example, the performance of the SBI Small Cap fund compared to the NIFTY Small Cap 100 benchmark. The cheaper it is, the less volatility the scheme has.
Standard deviation is a statistical tool for measuring the degree of deviation of returns from the mean value of returns. In statistical technical terms, standard deviation measures the spread of a set of data from the mean.
When we invest in any instruments we expect some return from it, and if there is a variation of the actual return from the anticipated return, the standard deviation measures the risk of the instruments.
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In finance, the standard deviation is applied to the annual rate of return of an investment to measure the volatility of an investment. This is also known as historical volatility and is used by investors to measure the amount of volatility they expect.
The standard deviation is calculated as the square root of the variance. The larger the standard deviation, the lower the probability that the actual return will be close to the expected return.
For example, if mutual fund Z has a standard deviation of 5% and an average return of 12%, it means that Z has a tendency to deviate by 5% from what is expected.
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