Can a one year SIP be a suitable investment option?
Systematic Investment Plans (SIPs) can make investing in mutual funds convenient and affordable. SIPs allow individuals to invest a fixed amount regularly into a mutual fund scheme of their choice. Through the power of compounding, even small instalments have the potential to build wealth over time. SIPs can help investors potentially navigate market volatilities while also inculcating disciplined investing.
The main advantage of SIPs is that a little contribution can go a long way – investors can start with just Rs 500 a month with the potential to accumulate good returns over time – SIP investments can be useful for short-term investments too. If you have a near-term requirement, you can consider an SIP for 1 year.
- Table of contents
- How to decide your investment horizon?
- SIP plans from Bajaj Finserv Asset Management Limited
- Factors to keep in mind while choosing 1 year SIP
- What are the benefits of SIP investment?
- FAQs
How to decide your investment horizon?
The ideal investment duration depends on several factors, especially your financial goal
So, if you’re saving money for a distant requirement, such as buying a house, or funding your child’s higher education, you may consider an SIP with a multiple-year horizon.
However, SIPs can come in handy for a near-term goal too – such as an emergency fund or purchase. In such a case, you can choose to start an SIP investment for one year or a little more.
Keep in mind that the type of fund suitable for a long investment horizon and a one year SIP may be different.
SIP plans from Bajaj Finserv Asset Management Limited
Here are some schemes by Bajaj Finserv Asset Management Limited that have the provision for SIP as well as lumpsum investments:
SIP plans from Bajaj Finserv Asset Management Limited Here are some schemes by Bajaj Finserv Asset Management Limited that have the provision for SIP as well as lumpsum investments:
A DEBT FUNDS
| SCHEME NAME | RISK LEVEL | DETAILED SCHEME INFORMATION |
|---|---|---|
| Bajaj Finserv Liquid Fund | Low to moderate | Link |
| Bajaj Finserv Overnight Fund | Low | Link |
| Bajaj Finserv Money Market Fund | Low to moderate | Link |
| Bajaj Finserv Banking and PSU Fund | Moderate | Link |
B. EQUITY FUNDS
| SCHEME NAME | RISK LEVEL | DETAILED SCHEME INFORMATION |
|---|---|---|
| Bajaj Finserv Flexi Cap Fund | Very High | Link |
| Bajaj Finserv Large and Mid Cap Fund | Low | Link |
C. HYBRID FUNDS
| SCHEME NAME | RISK LEVEL | DETAILED SCHEME INFORMATION |
|---|---|---|
| Bajaj Finserv Arbitrage Fund | Low | Link |
| Bajaj Finserv Balanced Advantage Fund | Very High | Link |
Factors to keep in mind while choosing 1 year SIP
If SIP is suitable for you: A lumpsum investment can potentially yield better returns if the markets are performing well, while an SIP can help mitigate risks in a volatile market. So, your risk appetite, the funds at your disposal, and your familiarity with market conditions can help determine whether to choose an SIP.
Instalment amount: This depends upon your investment goals, horizon, and the funds at your disposal and your financial commitments, among other factors. For a one year SIP based on a specific goal, you would need to estimate your goal amount at the end of 12 months, the potential returns of the scheme you have chosen and then decide your instalment size.
Type of scheme: This would depend on your investment horizon, risk appetite and financial requirement. Generally, debt funds tend to be relatively stable in the short term, while equity funds are more suited to long-term investments of three years and above.
Liquidity: To withdraw your SIP in one year, you must make sure that your scheme is liquid, especially that it does not have a lock-in period during which units cannot be redeemed.
What are the benefits of SIP investment?
Benefits of SIP
SIPs allow you to invest an amount of your choice at a frequency that works for you. Through the power of compounding, even small but regular instalments have the potential to build wealth over time.
Additionally, SIP investments can help mitigate risks through rupee cost averaging. When prices are high (as is your scheme NAV), your instalment amount (of say Rs 500) will be able to buy fewer units and when NAV is lower, it will purchase more units.
As a result, you end up buying low – which is in line with the traditional market wisdom of buying low and selling high – without having to time the market yourself. Over the long run, this can potentially lower your per-unit purchase price. The key idea of rupee cost averaging is to reduce the impact of short-term market volatility on your investment.
FAQs
Can I invest in SIP for 1 year?
Yes, you can invest in SIP for a few months, a year, or longer. Some schemes may require you to make a certain minimum number of instalments. Whether a 1 year sip is suitable for you or not, however, will depend on multiple factors, including your investment goal and instalment amount. Additionally, debt funds are considered more suitable for one year sip than equity investments, which are typically recommended for longer investment horizons.
What is the minimum investment amount required for SIP plans in India?
The minimum SIP amount depends upon the scheme and can start at Rs. 100 a month.
How can I track the performance of my SIP investments?
The consolidated account statement that is emailed to investors every month gives them information about their current holdings and all transactions related to their mutual fund investments. The factsheet issued by the Asset Management Company, meanwhile, has details of how the fund has performed with respect to its benchmark. You can also find information of how your fund has performed as compared to its peers on the Association of Mutual Funds in India portal and other websites.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.