Best SIP For Beginners In 2024- Proven Guide

Amid changes and a variety of options available in the field of personal finance. Systematic Investment Plans (SIP) have come up as a technique that can be adopted for a disciplined investment. As moving further into the year 2024, it is important to define which is the best SIP for beginners, fully corresponding to the trends in the present stock market, the economic situation in the country, as well as an individual’s financial targets.

According to financial expert Ankit Gupta, “Investors should look at SIPs that offer a balance of risk and return, particularly in sectors that are poised for growth in 2024, such as technology and renewable energy.”

Finance expert, Priya Sharma, quotes that “flexibility in SIP amounts and the option to increase investments over time can help investors make the most of market opportunities.”

Hence, an important question arises what are some of the best-performing SIP investment for beginners that can be looked at this year? The following article will help you to understand what is SIP plan as well as the best SIP for beginners to invest in 2024.

So, as not to confuse you with too many details it is better to see what is SIP plan is and why is it good in the first place.

About SIP Plan & Best SIP For Beginners

A Systematic Investment Plan (SIP) is one in which investors contribute a fixed amount of money towards the mutual fund more often than not via cheques, instead of large contributions. This approach offers several advantages: 

• Rupee Cost Averaging: Some people buy fixed quantities of the security at fixed time intervals which allows them to purchase more of the security when the price is low and less when the price is high hence being able to get a cheaper price per unit in the long run.
• Disciplined Investing: SIP investments encourage the culture of saving by avoiding the temptation of buying unnecessary and unprofitable shares by automatically investing for the shareholders.
• Flexibility: You don’t have to invest a huge sum while starting SIP; you can invest a small amount and build up your investment when you start earning more income.
• Power of Compounding: Such SIP investments made consistently over the years can be used to derive benefits that arise from compounding and therefore create immense wealth.

Now let’s take a look at some of the finest starting SIP options that can be expected for the year 2024 and also suggested by some of the top finance expert.

According to the report, SIP has taken a huge spike and reached all time high of ₹21,262.22 crore, in June 2024, depicting the future trend of SIP Investment.

1. Large-Cap Equity Funds

During the downturns, growth-oriented funds or small and mid-cap funds could experience a lot of volatility, but large-cap funds are stable performers that give steady returns. This type of fund buys stock in mature organizations that enjoy a good standing in their respective industries and have sound balance sheets. Looking at 2024, it can be also assumed that large-cap funds will remain popular, as the global economies keep recovering and developing after the pandemic.

Top picks for starting SIP in the large-cap equity funds criteria can include funds such as ICICI Prudential Bluechip Fund or Axis Bluechip Fund which have brought consistent returns in the long run.

2. Flexi-Cap Funds

For those individuals who are looking to start SIP investment and gain exposure across market capitalizations, the flexi-cap funds present a good chance. These funds have no restrictions in terms of the size of firms in the entire spectrum of the market and prove to be the best SIP for beginners.

Top Picks in the Flexi Cap Mutual Funds include- Parag Parikh Flexi Cap Fund and Kotak Flexi Cap Fund both of these mutual funds are recommended for SIP investments in 2024 as these are some of the best fund houses with good track records.

3. Index Funds

This form of investing is an attractive proposition as passive investment is growing in popularity across the world. These funds seek to emulate the performance of a given market index as they provide general market access at renewed expense.

Thus, the long-term SIP investor could prefer Nifty 50 index funds such as UTI Nifty Index Fund or HDFC – Index Fund – Nifty 50 Plan under the index fund SIP  investment criteria.

4. Balanced Advantage Funds

The balanced advantage funds are slightly risky compared to the debt funds but are less risky compared to the equity funds; thus it is most suitable for moderate risk takers as the investor gets exposure to both equity and debt funds in which the portion of the allocation varies depending on the current situation of the market at any given time. This category can further add new opportunities and can also continue to sustain the company’s growth.

To further support this argument the following funds have been observed to have delivered consistent returns in this category namely ICICI Prudential Balanced Advantage Fund and Edelweiss Balanced Advantage Fund.

5. Thematic and Sectoral Funds

In tune with the prevalence of certain sectors and issues in the year 2024, thematic and sectoral funds may be high-growth funds predicted by the experts. However, these SIP investments come with more risk or more exposure and should therefore be undertaken with caution.

Thus, given the continuous rapture of the digital revolution, funds that are thematic to the change such as the Tata Digital India Fund could be of interest as well as funds with healthcare as a priority in the global economy, such as DSP Healthcare Fund may be an interesting investment for the beginners.

6. International Funds

Going global can also assist in the distribution of risk and access to other markets for the growth of the business. This means that Indians get exposure to world markets through international funds which are available in India through mutual funds.

Such SIP investment to get started with investing in the U.S. market includes two funds that might be good for this purpose namely Motilal Oswal S&P 500 Index Fund or Franklin India Feeder – Franklin U.S Opportunities Fund.

7. Debt Funds

Whereas equity funds allow higher returns, debt funds are less risky, and you get regular income. From the results achieved so far, in 2024, in the SIP investment criteria with the possibility of a stabilization of interest rates, selected categories of debt funds may be considered.

For those looking for rather less risky solutions, check Standard Investment Portfolio in short-term debt-oriented funds such as HDFC Short Term Debt Fund or corporate bond funds like Kotak Corporate Bond Fund.

8. Small-Cap Funds

Small-cap funds are perfect for individuals with a high-risk tolerance and long-term capital gain orientation in mind but are not recommended for beginners. They may be unpredictable and therefore one must be very selective with the funds he/ she is investing in.

The two categories of funds that have performed well in this context are Axis Small Cap Fund and SBI Small Cap Fund.

Conditions to be considered before SIP Investment in 2024

Conditions, that need to be considered while selecting SIPs in 2024 include-

• Risk Tolerance: Don’t start buying funds without determining your risk tolerance. Equity funds and debt funds do complement each other and it will be wise to invest in both to ensure that the risk is diversified while the returns are also optimized.
• Investment Horizon: Choose your funds depending on the period within which you expect to get your money back. In Equity funds, the maturity of the investment is more than five years, while in the case of debt funds, they are most appropriate for a maturity of less than five years.
• Market Conditions: Accept economic changes and their implications for various markets and investment types.
• Diversification: Diversify your SIP investment by investing in as many different forms of funds as possible to avoid maximum risk.
• Fund Performance: The figures shouldn’t be observed as general averages but as numbers showing long-term results of funds.
• Expense Ratio: Take note of the costs involved in each fund, where high expense ratios reduce the overall returns you get from the investments.
• Fund Manager’s Track Record: Before making an SIP investment it is important to take time and investigate more on the fund manager of the particular fund and his/her past performance or track record in managing such kind of funds. Look at the ways to secure your financial future.

Conclusion

Moving through the year 2024, there is a lot of strength and accuracy in SIP investment to accumulate amass wealth. The investor should consider starting a SIP investment by selecting the mutual funds that are likely to help him or her achieve the stated financial objectives, bear acceptable risk levels, and fit the market trend. As for the options mentioned above, while they may look promising and the best SIPs for beginners, one should always investigate the matter or better still consult a financial planner before investing.

The main idea behind starting SIP is its steadiness and the possibility of sticking to a chosen strategy for a long time. Even though one can exit the market sometimes due to short-term volatility. it is always advantageous to remain invested and continue paying for SIPs to be able to capture compounding at its best and achieve your financial goals. Finally, never forget to check and adjust an SIP investment from time to time to conform with the new trends and goals. If invested properly and disciplined in its regimes, SIPs will go a long way especially in the year 2024 and beyond to aid in wealth creation.