Investment Knowledge: Which SIP Is Best For 3 Years? (2024)

A Systematic Investment Plan (SIP) is considered to be one of the best ways to invest in mutual funds. In fact, more money was invested in mutual funds through SIPs in September 2021 than ever before.

SIPs require you to be consistent and invest across market cycles. This has benefits. For example, you won’t have to worry about timing the market. In fact, investors are known to invest in a SIP for at least 3 years.

The reason behind this is simple. Wealth creation takes time because money takes time to compound. This is especially true for investments like mutual funds that are tied to the stock and bond markets.

That’s why it’s important to invest in only the best SIPs whether it's for 3 years or more. You need to invest in funds that are right for your financial goals.

Lucky for you, we’ve compiled a list of the best SIPs that our mutual fund advisor, Wealth First, has handpicked.

Best SIPs For 3 Year Investment In 2023

Debt funds and their variants like liquid funds are known to be the best SIPs for 3 years. Mutual funds that invest in stocks are out of the picture because they’re generally recommended for the long term or 5+ years.

There’s logic to this. Stocks are inherently volatile over the short term but are generally known to grow across 5+ years. Equity funds invest in stocks so, by association, they’re considered to be a long term investment. You can consult a Cube Wealth Coach or download the Cube Wealth App.

Debt securities like bonds that debt funds generally invest in are considered to be relatively stable. They tend to generate a fixed income (predictable returns) across 0-3 years.

1. IDFC Banking & PSU Debt Fund

This fund invests in bonds and other debt securities issued by banks and public sector undertakings (government-backed companies) that generally have a high credit rating in India (AA+).

• AUM: ₹19,205.19 Crores
• 3-Year Returns: 9.39%
• Expense Ratio: 0.62%
  

IDFC Banking & PSU Debt Fund’s SIP for 3 years has outperformed its benchmarks, NIFTY Banking and PSU Debt Index and CRISIL 10 Year Gilt Index.

2. ICICI Prudential Corporate Bond Fund

This fund takes a slightly different approach to the one mentioned above. It primarily invests in bonds issued by corporations that have a high credit rating like HDFC Limited. It also invests in government-backed securities.

• AUM: ₹20,979.92 Crores
• 3-Year Returns: 8.48%
• Expense Ratio: 0.58%
  

ICICI Prudential Corporate Bond Fund has been active for over 12 years and has generated 8.48% returns when speaking of a SIP for 3 years.

3. HDFC Money Market Fund

This fund primarily invests in money market instruments that mature in a year or less like Treasury bills and government bonds.

• AUM: ₹14,252.35 Crores
• 3-Year Returns: 6.69%
• Expense Ratio: 0.35%
  

HDFC Money Market Fund has been on the market for over two decades and a SIP for 3 years in this fund would’ve generated solid returns of 6.69%.

4. Nippon India Liquid Fund

Liquid funds are generally used for generating solid returns for short term events like emergencies. This fund primarily invests in debt securities that mature in 60-91 days.

• AUM: ₹21,654.55 Crores
• 3-Year Returns: 5.30%
• Expense Ratio: 0.32%
  

This fund is also eligible for Cube ATM, a feature that lets you withdraw money instantly. Nippon India Liquid Fund is one of the best SIPs for 3 years as it has outperformed traditional bank savings accounts and FDs.

5. PGIM India Insta Cash Fund

This is another liquid fund that invests in creditworthy bonds and debt securities that mature in less than 91 days.

• AUM: ₹21,654.55 Crores
• 3-Year Returns: 5.30%
• Expense Ratio: 0.23%
  

PGIM India Insta Cash Fund is featured on this list of best sips for 3 years because it has been handpicked by Cube’s advisor Wealth First and has generated relatively better returns than bank savings accounts and FDs.

How To Invest In Mutual Funds SIP Online?

There are multiple ways to invest in the best SIPs for 3 years online. You can hop on to investment apps that allow you to invest in SIP mutual funds. You’d have to:

• Download the app
• Go through a KYC process
• Select best SIPs for 3 years yourself
• Invest and stay on top of your funds every day
  

Want to access the full list of best SIPs for 3 years? Tap here

FAQs

1. Is a 3-year SIP suitable for all types of investments?

Ans. A 3-year SIP may not be suitable for all types of investments, especially those with longer-term financial goals. It is best suited for short to medium-term objectives where you anticipate needing access to your invested funds in approximately three years.

2. What factors should one consider when choosing a 3-year SIP?

Ans. Factors to consider when selecting a 3-year SIP include your financial goals, risk tolerance, and the investment horizon. It's essential to choose mutual funds that align with your goals and have a history of consistent performance. You can consult a Cube Wealth Coach or download the Cube Wealth App.

3. Are there specific mutual funds designed for a 3-year investment horizon?

Ans. While there are no mutual funds specifically designed for a 3-year horizon, you can select mutual funds based on their investment objectives. Debt funds or hybrid funds with a significant debt component are often favored for shorter investment periods.

4. What are the advantages of a 3-year SIP over other investment options?

Ans. A 3-year SIP offers a disciplined and automated approach to investing, which can help individuals achieve their short to medium-term financial goals. It provides an opportunity for wealth accumulation with lower volatility compared to equities.

Conclusion

A 3-year SIP can be an effective investment strategy for individuals with short to medium-term financial goals. It provides a structured and disciplined approach to investing in mutual funds, making it accessible to a wide range of investors.

When selecting a 3-year SIP, it's crucial to consider factors such as your specific financial objectives, risk tolerance, and the investment horizon. You should choose mutual funds that align with your goals and have a track record of consistent performance. You can consult a Cube Wealth Coach or download the Cube Wealth App.

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‍Note:

Facts & figures are true as of 25-10-2021. All information mentioned is for educational purposes and relies on publicly available information. None of the information shared here is to be construed as investment advice. We strongly recommend you consult a Cube Wealth coach before investing your money in any stock, mutual fund. PMS or alternative asset.