Should you invest in a single mutual fund or multiple fund schemes?

Investing in SIPs is the way forward for a beginner and the top 10 SIPs have a safe investment horizon of 3-5 years.

Should you invest in a single mutual fund or multiple fund schemes

How to segregate your corpus fund for investment?

If you have a large corpus of funds to invest every month example Rs. 30,000/- then the amount could be invested into the Top 10 SIPs. The challenge is then to monitor each fund and track its trajectory for the next 1 year. Make sure to readjust the portfolio at the end of the year and shift the investment into money-making SIPs. 

Also Read: Monthly SIP investment

Objectives of SIP investment for the long term. 

The mantra for the long term is to invest in open-ended SIPs. The advantage is there is no lock-in period. Select 5 funds or 10 funds as the case may be and monitor their growth at the end of the month. This way you can enter the market anytime. So, the performance of the fund in question plays out as per the market dynamics. All funds go through their highs and lows. 

Restructuring your funds annually. 

At the end of the year, if you started your portfolio with 10 funds, you can restructure those funds and pool the money into say 7 or 6 funds. Invest in the positive funds only and monitor them again. You would see your investment grows over a year, and the loss and gain average out to give you a decent growth in one year. By the time your investment starts to enter the 2nd year you have a decent portfolio of positive performing funds to monitor for the second year. By and large, they should be able to provide an average of 10% minimum annually. 

In the 3rd year, you can see that you have additional funds to invest in Flexi cap funds. These funds provide a low-risk investment across market sectors. There is also a risk in too many schemes that they don’t provide high returns as the portfolio is very diverse. So, portfolio restructuring is of high importance at the end of each investing year. The idea would be to increase your investment in Flexi cap schemes. 

Also Read: Multi vs Flexi cap Funds

When should you invest?

The best time to invest in mutual funds is when the markets are not overvalued, otherwise, the cost of investment could be high. Timing the market is of high importance. To avoid being taxed for SIP, you need to avoid withdrawing or redeeming your investment in 1 year. After 1 year the returns you get are not taxable. 

The flexibility of SIP investment.

SIP can be stopped anytime, unlike fixed deposits, etc. If you stop you can choose to continue being invested in the fund and redeem at a later date or you can redeem immediately. If you redeem within a year a tax of 15% is levied on gains only. 

The advantages of ELSS (Equity Linked Savings Scheme) investment.

By investing in ELSS (Equity linked savings scheme) you can save on tax. Up to an amount of 1.5 lakhs you can claim tax deductions under section 80 C. So, the catch is don’t invest more than 1.50 lakhs in ELSS as there is no tax benefit. So if you invest Rs. 12,500/- per month on a SIP and that, in turn, is an investment into ELSS, you will be eligible to claim 1.5 lakhs in tax deductions for that year. Make sure you invest in the SIP in the month of April as the claim is made within a financial year which is April to March. 

Also Read: Best Pharma Sector Mutual Funds

How to increase your SIP funding?

If your funds increase over time and you can invest more in a SIP, do so by investing in a fresh SIP of either the same fund or a different fund. The reason is it is difficult to increase the fund investment as calculations go haywire. So, it is safer to invest the same in a new fund or the same fund with a fresh SIP of the increased amount. 

SIP vs RD and FD

A SIP is any day better than a recurring deposit or RD. A SIP has the capability to give a higher return than an RD. If you have an appetite for risk, it is better to set up an investment in SIP through equity mutual funds. The alternative is to invest in debt funds (DF) for better returns than an FD and that is too low in risk. 

Also Read: Should you invest in Solution-Oriented Funds?

Invest in SIP whenever you have Rs.500

Instead of hoarding money and then buying an investment plan, it is better to invest whenever you have the money so that your money is always invested. SIP is really good for long-term investments. 

MF investments through SIP

SIP is a method of investment in Mutual Funds. There are 2 ways to invest in Mutual Funds, SIP or lump sum. When you invest a large amount of money in one shot it is called a lump sum. SIP is a monthly investment. 

What sort of SIP should be chosen for investment?

Choosing a SIP depends on your investment requirements. If you require a high-risk investment better to go for ELSS or small and mid-cap mutual funds. If you want to take a moderate risk then your choice should be large-cap mutual funds. Debt mutual funds are low-risk-oriented. Having a corpus of 30,000 per month should be enough to spread the amount in 3 or 4 different funds. To play it safe and expect a return of 10-15% per year in each fund, one can think of investing 40% in small-cap funds with high risk. This should be monitored and annually the movement into more secure funds in the small-cap basket should be invested. Similarly, 60% of the balance funds can be invested in large-cap and medium-cap funds basket and its growth are to be monitored. The returns at the end of 5 or 10 years would effectively help earn around 15% which is really a good portfolio. 


Savings help to tide over difficult periods in anyone's life. The problem is we save money and wait for it to become some amount and somehow it is spent again. The key to savings is starting small and at any time in life. SIP is a method of saving that helps accumulate your small savings and at the same time makes them grow. Save for a better future and financial peace of mind.  

How do SIPs work? SIP or Lump sum:


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