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What is the best SIP investment

I with a age of 34 years doing service. I can save my earning Rs. 5000 per month. I would like to start SIP or investment. I am confused to which SIP should be select and for which period i.e. 6 month, 1 year, 2 year, 3 year or more for long term. I am seeing with different portal that 1 year SIP is giving more return. Should be go with these or go with long time SIP. Which fund sector should also be selected i.e. Equity, Infra and Diversify?

Sep 9, 2015 by Vijay Bansal,   |   Mutual Fund

Firstly you have made the right decision to invest in mutual funds through monthly SIP. If you choose the right mutual funds and continue your SIP over a long period of time, you will be able get excellent returns and accumulate a substantial corpus. Since you are new to mutual funds, your confusion is understandable. The returns over different periods depend on the market conditions prevailing during that period. If you looked at the returns some time back you may have seen 1 year SIP giving higher returns, but if you look at returns now you will see that 2 year or 3 year returns are much higher than 1 year returns. This is because in the last few weeks the market has fallen sharply with the Sensex falling over 5% in just the last week one week. The market may bounce back sharply from this point and the picture may be very different one year from now. Our point is that, short performance is not a great indicator of future performance.

You should start with identifying goals for which you are making your investment. Your investment horizon should be determined by your goals. For example, if your goal is retirement planning, then you should continue with SIP till retirement. You can change the funds that you are investing in if the funds are underperforming or if your risk profile has changed. But your investment horizon should not change. Anyway, it is always beneficial to invest in mutual funds over a long time horizon because you will benefit from the biggest wealth creator, which is the power of compounding.

Since you are a new investor, you should avoid sector specific funds. For a long term investor, diversified equity fund is the best investment option. However, you should monitor your fund performance on a regular basis and see how the fund is doing relative to its benchmark and its peers.

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