How To Choose Best SIP – Updated 2023

Investing in a Systematic Investment Plan (SIP) is a popular way to grow your wealth over time. However, choosing the best SIP plan can be a daunting task, especially if you’re new to investing. In this article, we’ll explore some steps you can take to choose the best SIP plan that aligns with your investment goals.

 How To Choose Best SIP
How To Choose Best SIP. Photo: Javatpoint

Step 1: Determine your investment goals

Identifying your investment objectives is the first step in selecting the optimal SIP plan. Take into account elements like your investing horizon, risk tolerance, and desired investment quantity. This will enable you to select a strategy that supports your financial objectives.

Step 2: Research different SIP plans

After you’ve decided what your financial objectives are, you should start looking at SIP plans. Search for plans that fit your risk tolerance and investing objectives. Take into account elements including the track record, investment portfolio, expense ratio, and previous performance of the fund manager.

Step 3: Consider the fund manager’s track record

The fund manager’s track record is an essential factor to consider when choosing a SIP plan. Look at the fund manager’s history of managing similar investments and check their track record of delivering returns over time. Choose a SIP plan with a fund manager who has a proven track record of delivering consistent returns.

Step 4: Look at the expense ratio

The cost levied by the mutual fund firm to handle your investment is known as the expense ratio. Selecting a SIP plan with a low expenditure ratio is crucial since it can have a big impact on your long-term profits. Try to choose a plan with an expense ratio under 1%.

Step 5: Check the investment portfolio

The investment portfolio is the collection of assets that the mutual fund company invests in on behalf of investors. It’s crucial to look at the investment portfolio to determine if it aligns with your investment goals and risk appetite. Consider factors such as asset allocation, sectoral diversification, and investment style.

Step 6: Check the past performance

Past performance is a good indicator of how a SIP plan has performed in the past. Look for a plan with a consistent track record of delivering good returns over the long term. Choose a SIP plan with a history of outperforming its benchmark index consistently.

Step 7: Consider the exit load

The exit load is the fee charged when you withdraw your investment from a SIP plan. It’s crucial to look for a plan with a low exit load or no exit load, as this can help you avoid penalties if you need to withdraw your investment early.

FAQs :

Q. What is a SIP?

A: A Systematic Investment Plan (SIP) is a type of investment vehicle that allows investors to invest a fixed amount of money regularly in a mutual fund scheme.

Q. What is the minimum amount required to invest in a SIP?

A. The minimum amount required to invest in a SIP varies from one mutual fund company to another. In most cases, the minimum amount required to invest in a SIP is Rs. 500.

Q. Is it safe to invest in SIP?

A. SIP is a safe investment option as it allows investors to invest small amounts of money regularly, which helps in reducing the risk associated with investing a lump sum amount.

Q. Can I withdraw my investment from a SIP at any time?

A. Yes, you can withdraw your investment from a SIP at any time. However, there may be an exit load charged if you withdraw your investment before a certain period. It’s crucial to check the exit load before investing in a particular SIP plan.

Q. Can I change the amount I invest in a SIP?

A. Yes, you can change the amount you invest in a SIP. Most mutual fund companies allow investors to increase or decrease their SIP amount at any time.

Q. How long should I invest in a SIP?

A. The ideal investment horizon for a SIP is five to ten years. However, you can invest in a SIP for as long as you want.

Q. Can I invest in multiple SIP plans?

A. Yes, you can invest in multiple SIP plans. However, it’s essential to ensure that the plans align with your investment goals and risk profile.

Q. How often should I review my SIP plan?

A. It’s crucial to review your SIP plan periodically, at least once every six months. This will help you determine if the plan is performing as expected and whether it aligns with your investment goals.


The optimal SIP plan should be chosen after giving serious thought to a number of variables, including your financial objectives, risk tolerance, and desired contribution quantity. It’s crucial to examine various SIP options, and look into the track record, expense ratio, investment portfolio, prior performance, and exit load of the fund manager.

You can select the finest SIP plan that supports your financial objectives and your investing goals by following these steps. Keep in mind to routinely examine your SIP plan to make sure it is still operating as planned.

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