Best SIP Plans to Invest in 2024 - ICICI Bank

Investing can often seem like a difficult task, especially for people who are new to Mutual Funds and Systematic Investment Plans (SIPs). This blog will give you an idea about SIPs and guide you in selecting the best plans for 2024. It is crucial to develop an understanding about SIPs for long-term financial planning, such as retirement and this article will serve as a comprehensive guide for both new and experienced investors.

Understanding SIP and How it works

SIP, or Systematic Investment Plan, is a popular way for beginners to start investing in mutual funds. It means investors can invest a fixed amount at regular intervals of time, generally monthly or quarterly. It is best suited for people who are looking to start their investment journey and trying to build wealth, planning for retirement, or have a set financial goal in mind.

SIP is a regular investing style in various investment instruments such as stocks and mutual funds. Most finance experts recommend it as one of the affordable and convenient ways to start investing in mutual funds. When you invest in small amounts every month, you have the opportunity to overcome any market volatility that might occur over time. 

Best SIP plans for 2024

For 2024, following are the two notable SIP plans that stand out:

• ICICI Prudential Smallcap Fund: This Fund focuses on small-cap equities and has shown consistent performance with a CAGR of 12.8% since its launch. It is an attractive option for investors with a moderately high-risk appetite due to its ability to pick high-growth small-cap stocks.

• ICICI Prudential Technology Fund: Given the rapid growth of the technology sector, the fund can gain more from this trend. With a historical CAGR of 12.3 %, it is a high-risk, high-reward option, primarily for investing in tech and tech-intensive companies.

Factors to consider before choosing the Best SIP to invest in 2024

Before diving into SIP investment, several factors need to be taken into consideration:

• Investment goals: Your financial goals will dictate the type of SIP suitable for you. For instance, Equity Funds might be better for the long-term growth, while Debt Funds could be suitable for short-term goals.

• Risk tolerance: Your comfort with risk influences the fund choice. Higher risks (Equity Funds) may offer higher returns, whereas lower risks (Debt Funds) provide more stability.

• Time horizon: The duration of your investment plays a critical role. Longer investment horizons can afford more risk, as there is time to recover from the market downturns.

• Fund performance: Evaluating the past performance of a fund, although not a guarantee of future results, can provide insights into its management and strategy.

Benefits of investing in the best SIP plans

Here are a few key benefits of investing in SIPs:

An ideal way of Investing

SIPs are said to be a disciplined way of investing in mutual funds. Investing in SIPs every month gives you the freedom to take control of your finances and save a set amount of money monthly for investment.

Start Small

The best part of SIP investment is that anyone can do it. Newcomers to the investment journey can start small, with amounts as low as Rs 500 per month. This eases the burden on your pocket while getting you ready for investments.

Less Dependent on Market Volatility

Another perk of SIP investment is that with low monthly amounts, you do not need to worry much about market fluctuations.

Compounding Benefits

It is essential to understand that the monthly returns from SIP investments are reinvested in your investment amount until it matures. This compounding process helps grow your funds.

Best Mutual Funds for SIP

When investing in SIPs (Systematic Investment Plans), certain pitfalls should be avoided to ensure a healthy and profitable investment journey:

• Timing the market: A common misconception is that one can predict the market highs and lows. SIPs, by design, reduce this risk through regular, disciplined investing, regardless of the market conditions. Attempting to time the market is often counterproductive and can lead to missed opportunities, especially for long-term investors.

• Ignoring risk profile: It is crucial to invest in funds that align with your risk tolerance. Overlooking this can lead to investing in either too aggressive or too conservative funds, potentially causing undue stress or financial losses. Understanding your risk appetite ensures a more comfortable and suitable investment journey.

• Neglecting research: Investment requires due diligence. Before committing to any SIP, it is essential to research about the past performance of the fund, the fund manager's track record and investment philosophy. Blindly investing based on the opinions of other people or trends can be risky.

• Inconsistency in investing: Inconsistent investments can disrupt the advantage of Rupee Cost Averaging (RCA) and impact the potential for long-term growth. Regularity or consistency is the key.

• Chasing past performance: Investors often chase funds with high past returns, but past performance is not indicative of future results. It is important to understand the reasons behind a fund's performance and whether it aligns with your investment goals.

• Ignoring tax implications: It is important to understand the tax implications of your investments. Different Mutual Fund Schemes have varied tax treatments, which can affect your net returns.

How to pick the best mutual funds for SIP to invest

Investing in mutual funds is a popular way to invest your money to earn profits. It will help you in the long run and benefit you. However, choosing the best Mutual fund to invest in is quite tricky with many types of funds in the market. Go through the below factors and learn how to choose the best mutual funds in India :

Know Your Investment Objective

The first factor to consider is your investment objective. Every mutual fund has an objective based on a set of strategies. You must decide what are the right strategies and objectives for you, and then proceed with the investment.

Risks and Benefits 

Each mutual fund provides various types of risks and associated benefits. Each type has a unique set of returns, and it is important to choose the one that aligns well with your risk profile. Investors can make decisions by analysing the returns and risks.

  Investment Target 

You have to understand your investment goal and why you are buying the mutual fund, whether it is for tax savings or capital appreciation. Once you understand that, decide which mutual fund type you prefer.

How to invest in the best SIP plans 

Here’s how you can invest in the best SIP plans in India:

Choose a mutual fund  

Begin with choosing the best SIP to invest in. To do so, you can research and compare various data to select the SIP that suits your financial goals, risk tolerance, and fund performance. 

Select the frequency of investment  

Next, choose the frequency of your SIP investment. The most common frequency chosen is a monthly SIP plan because it is convenient and easier for investors to pay out monthly.

  Set up the SIP with a mutual fund plan

If you are a first-time investor, complete the KYC details, enter your bank details, and complete the SIP contribution and frequency details. Once you have chosen your mutual fund plan, complete the investment and submit it.

Since this is an auto-debit process, the chosen SIP amount will be deducted from your bank account every month and you will get the notifications accordingly. 

By being mindful of these common mistakes, investors can make informed decisions, leading to a more effective and rewarding SIP investment experience.

In summary, choosing the right SIP in 2024 depends on various factors, including your financial goals, risk tolerance and investment horizon. By understanding these elements and avoiding common pitfalls, you can make informed decisions that align with your long-term financial objectives.