Best Sbi Mutual Fund For Sip

Best Sbi Mutual Fund For Sip – In this post, I will reveal my top 10 SIP mutual funds to invest in India in 2021 for my blog readers. If you are a long time reader of my blog, you are well aware that I have been publishing my top 10 SIP mutual funds to invest in India on an annual basis.

If you remember, last year I moved away from the recommendations of active funds and adopted passive funds (index funds) and the reasons are given below:

Best Sbi Mutual Fund For Sip

Best Sbi Mutual Fund For Sip

I want to share some of my past tweets where I shared that I accept index funds

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We know there are rare breeds (fund managers) who can beat the index I also know that finding such rare species is almost impossible So get index funds — (@) November 18, 2020

99% of financial products are for sellers and the remaining 1% is for you Learn the art of saying NO to the 99% — (@) December 4, 2020.

By embracing index investing, you end your search for the BEST MUTUAL FUND COMPANY and the BEST FUND MANAGER. The only risk that you cannot avoid is the market risk, which you have to manage by a proper allocation of assets between debt and equity (I say at the portfolio level).

However, adopting index investing requires a lot of patience Because even though many claim to be patient, when the market starts to fall, they take a knee-jerk reaction.

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The disadvantage of index funds is that there is no downside protection since the fund manager has to replicate the index. You can’t take your calls and make sure you stay in cash when the market falls. Therefore, index funds depreciate at the same rate as the index.

At this stage, many investors begin to compare index funds to active funds versus active funds.

However, we can easily avoid such deterioration at the portfolio level if the correct asset allocation is done with debt and equity (in equity) taking into account their goals.

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Paying more for active funds is justified only if the fund manager returns more than ONE PERCENT compared to the index fund. If this is not possible, then there is no point in adopting active funds

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It is a proven track record that no fund manager on this EARTH can consistently beat the index. Therefore, a few years of poor performance can cost a lot more than a few years of poor performance

“The winning formula for success in investing is to own the entire stock market through an index fund, and then do nothing. Just stay the course.” – John C. Bogle, The Little Book of Common Sense Investing “If I had to summarize my opinion on investing, it is this: Every investor must choose a strategy that has the highest probability of achieving their goals. And I think that for the most part investors, dollar cost averaging provides the greatest potential for long-term success in low-cost index funds. – Morgan Housel, The Psychology of Money (Timeless Lessons on Wealth, greed and happiness)

Such a tough task for you and me is the rare species (fund manager) that can generate returns of more than 1% above the benchmark.

When you decide to invest in index funds, you only need to focus on three aspects of the fund and they are below.

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# Tracking error: – It is nothing but how much the fund deviates in terms of returns with the index. The tracking error means that the background performance is good

Now before you jump into investing, you should have an idea of ​​what the basics of investing are. I repeat this exercise on an annual basis in my blog posts But I always look for similar questions from readers So, to give clarity, I write again

According to me, before jumping into the investment, one must know how prepared they are for the emergency The emergency can be the loss of life, meeting with an accident, the hospital or a sudden loss of income or work.

Best Sbi Mutual Fund For Sip

So, first cover with the appropriate life insurance (term life insurance where your annual income should be at least 15-20 times). Refer my post “Top 5 Online Insurance Plans in India”. You must have your own health insurance (instead of relying on employer-provided health insurance). Refer my post “Top 5 Best Health Insurance Plans in India” and “Top 5 Super Top-up Health Insurance Plans in India”. Buy about 15 to 20 times your monthly salary body as accident insurance. So finally create an emergency fund of at least 6-24 months of your monthly commitment.

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Once these principles are done, think about investing. If your principles are not done well, everything you invest can collapse at any moment. Let’s go ahead and understand the basics of investing

I have noticed that many investors invest in mutual funds just because they have some extra money. The second reason may be that one is guided that mutual funds are better in the long run as compared to FDs, PPF, RD, or even LIC endowment products.

If you have clarity about why you invest, when you need money and how much money you need at that time, then you will have better clarity in choosing the product. So, first, identify your financial goals

You need to know the current value of that goal In addition, you also need to know the rate of inflation associated with that particular goal Remember that every financial goal has its own inflation For example, the cost of your education or marriage child varies with inflation which is the inflation rate of family expenses.

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By identifying the present value, time frame and inflation rate of that particular goal, you can easily understand the future value of that goal. This future value of the target is your target amount

I wrote a separate post on how to set your financial goals “Financial Goals – How to set them before jumping into investments?” Read the same in

The next step is to identify the asset allocation Whether it is a short-term goal or a long-term goal, the proper allocation of assets between debt and equity is paramount. I personally recommend a low-fee asset allocation strategy Note that this may vary from individual to individual However, the basic idea of ​​asset allocation is to protect your money and ensure a smooth journey towards achieving to your financial goals.

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If the goal is less than 5 years – don’t touch equity products Use debt products of your choice like FD, RD or debt funds

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While choosing a debt product, make sure that the maturity period of the product should match your financial goals. For example, PPF is the best debt product However, it must match your financial goals If the PPF maturity period is 13 years and your goal is 10 years, then you are missing out on meeting your financial goal.

The next and biggest step is the expected return from each asset class For equity, you can expect a return of around 10% to 12% For debt, you can expect a return of around 6% to 7%

When your expectations are defined, you are less likely to deviate or accept a knee-jerk reaction to instability.

Once you understand what your expected return is from each asset class, the next step is to identify the portfolio’s expected return.

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Let’s say you have defined the asset allocation of debt: equity as 40:60 If the expected return on debt is 6% and equity is 10%, then the expected return of the general portfolio is below.

Once the target amount is defined, the asset allocation is made, the expected return from each asset class is defined, then the last step is to identify the amount to invest each month.

There are two ways to do this One is a constant monthly investment over the target period The second is growing by a fixed percentage every year until the target period Decide which one is best for you

Best Sbi Mutual Fund For Sip

How many mutual funds do we have? Is it 1, 3, 5 or more than 5? The answer is simple… you don’t need more than 3-4 funds to invest in mutual funds. Whether your investment is Rs 1,000 per month or Rs 1 lakh per month With a maximum of 3-4 funds, you can easily create a diversified equity portfolio.

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Having too many funds does not give you enough diversification. Instead, in many cases, it can cause your portfolio to overlap and lead to underperformance.

Remember that equity funds and debt funds are taxed differently So you should also understand the tax part before jumping into investing I have tried to explain the same in the picture below

I hope the tax part is clear for all of you If you still have doubt refer my last post “Mutual Fund Tax FY 2020-21 (AY2021-22)”.

Now let me share with you my top 10 SIP mutual funds to invest in India in 2021.

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Last year I recommended two large cap index funds I hold the same fund