How to Choose the Best Mutual Funds for SIP Investment

In India, mutual funds are a popular investment option due to their convenience and diversification benefits. Moreover, one can quickly start an investment with just a small amount of money and benefit from professional management of their investments. To invest in it, I personally used the Bajaj Finserv app, one of the top mutual fund app in India.

In the current era where digitalization has taken over, investing in the same is as easy as ordering groceries from your smartphone. You need the right app, an internet connection, and you are good to go. 

What are mutual funds?

It is an investment vehicle in India that pools money from multiple investors and invests the funds in a diversified portfolio of securities. These are bonds, stocks, and money market instruments. 

The mutual funds are managed by professional fund managers who are well-versed in making investment calls on behalf of the investors and charge a fee for the same. The returns on the investment are distributed among the investors in proportion to their investments. 

In our country, mutual funds are regulated by the Securities and Exchange Board of India (SEBI), and various types of mutual funds are available. Now, these can be equity funds, hybrid funds, index funds etc. 

How to choose the best mutual funds for SIP investment?

  • Investment Goals

Before you invest your hard-earned money, it is essential to define your investment goals. These long-term or short-term goals help you decide exactly what type of mutual fund you should invest in. 

  • Risk Tolerance

Risk tolerance is your ability to tolerate market volatility. For example, if you are a conservative investor, you may want to invest in debt funds. However, if you are an aggressive investor, you may want to invest in equity funds. 

  • Past Performance

This factor is a good indicator of how the mutual fund has performed in the past. One should evaluate the past performance of the mutual fund over different time periods and compare it with its benchmark index. So, a fund that consistently outperforms its benchmark index may be a good investment option. 

  • Asset Size

Mutual Fund’s asset size is a very important factor to consider. A mutual fund with a significant asset size may find it challenging to generate high returns. This is because the fund manager may find it challenging to find good investment opportunities. 

  • Expense Ratio

When you are analyzing which are best mutual funds for sip in 2023, analyzing the expense ratio is also very important. It is basically the annual fee charged by the mutual fund for managing your money. A lower expense ratio means more of your money is being invested, which can result in higher returns over the long term.

How to invest in mutual funds?

In my personal opinion, I’ve been using the Bajaj Finserv application for over a year now. It is one of the best and smoothest applications to use to invest in mutual funds. Also, it offers a mutual fund calculator to plan everything in the sorted manner. 

  1. Download the application
  2. Sign up with your mobile number
  3. Go to the Mutual funds under the Investment Bazaar section
  4. Proceed as per your requirement

So, the next time a potential investor asks you, “Which app is best to invest in mutual funds?” you know which one to suggest to them!