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How to invest through SIPs for the long term

I am a manager in a public sector bank, salary 53k approx, want to start investing in SIP with R.s 5000 per month for 10 years. So please help me to identify best products and step wise guidance to start it from grass root level?

Oct 29, 2015 by Pravesh, Lucknow  |   Mutual Fund

Since you have a 10 year investment horizon, equity funds will be the ideal investment options for you. Equity as an asset class, can provide higher returns relative to all other asset classes over a 10 year investment horizon. Since you plan to start a monthly SIP of Rs 5,000 you should select one or at most two equity funds. You can select between large cap, diversified equity or small and midcap funds based on your risk tolerance and investment objectives. For example, if you want good returns and at the same time, do not want very high volatility in your portfolio, you can allocate 80% of your SIP to a large cap fund and 20% to midcap fund. Since you have a long investment horizon, you should choose consistent performers in your portfolio. We have discussed the most consistent performers different equity fund categories, in the following articles.

Best mutual fund consistent performers in 2015: Large Cap Funds

Best Small and Midcap Mutual Funds: Consistent performers for investment in 2015

Best Diversified Equity Mutual Funds: Consistent Performers for investment in 2015

If top equity funds give on an average expected return 15 – 20% over the next 10 years, you can accumulate a corpus of Rs 14 – 19 lacs, with your Rs 5000 SIP. However, you should monitor the performance of your investment on an ongoing basis, and make appropriate adjustments as necessary.

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