Don’t Ask This Question -Which Mutual Fund SIP is best for 5 10 15 years? –

Which mutual fund SIP plan should I choose for 5, 10, 15, 20 years? This is the common question I am receiving from most of the people. My answer to them is NONE. This is the wrong question, please do not ask this question.

If you ask the wrong questions, you will never get the right answer.

You never gonna get the right answer. Who will anybody know whether X fund is going to perform for the next 10 years when I can never know that the same fund is good for even next month.

Which mutual fund SIP is best for 5 10 15 years?

All we presume is based on the past performance, CRISIL rating, portfolio, fund manager. We just try to identify which stock the fund is buying, what is the strategy they are using. Every piece of information we have is of past. We do not have real time data and information.

In fact we do not know that fund managers are doing, what is their next strategy, what they will do next? and so on. We are not even looking at the funds coming or going out in to the scheme every day. So how can we ever say that the X fund is good for next 10 or 15 years?

The reason people are asking this question is they are still in the mindset of LIC policy where you just buy it once and forget for the lifetime. Thinking that you will get certain amount of money at the maturity date. They think that SIP is like bank FD or recurring deposits where you just have to invest and forget!

Many people think SIP is a premium you are paying just like you pay for your insurance policy. Many people have a fear that mutual fund house will levy a penalty if they miss an SIP instalment. All they know is this only.

They buy a product, pay a premium and sit ideal thinking that they will get desire amount in the future. They take help of the online forums and portals to choose a mutual fund scheme.

You go online and ask some forum that Which is the best mutual fund SIP for next 5, 10, 15 years? someone will answer you that X fund is best for long-term. You check the rating of the scheme and at the most check the fund’s past performance for last 5 years. And that’s it. You are ready to invest in that fund.

This is not how you should manage your money/investment. So don’t ask wrong question about which is the best mutual fund SIP for next 5, 10, 15 years? This is so annoying, you are destroying your wealth and money. Don’t play with your money like this.

So What Should I Do?

You need to understand the risk. You classify investment in terms of risk and not in terms of return. For particular goal you need money in next 5, 10, 15 years, you need to understand what kind of risk you take. And then you understand what kind of mutual fund category you should choose for that goal.

Nobody is asking what is the mutual fund category I should choose for 5, 10, 15 years? – That is the right question. People are asking just for the fund names, that’s so stupid! How do you know the guy who is recommending X fund to you is right or wrong?

Believe me, it’s easier to find the scheme on your own. If you do a little bit of research. Nobody can say what is right or wrong for next 5, 10, 15 years. Please don’t ask this question. Instead study fund category to understand why X fund is in this category, why Y fund is in that category.

Why HDFC top 100 is the large cap fund? What is the different between hybrid fund and balanced fund? if you know the reason, you are good to go. This are the kind of questions you should be asking. You should try to find the answers to these questions.

All the answers you can find out on the internet if you spend some time. Google is the fantastic search engine if you know what you should be searching. Nobody wants to know how to select the mutual funds that suits your goals.

There is no fund suitable for 5, 10, 15 years.

because you choose a fund today and it will start going down from tomorrow, what will you do? you will wait for sometime thinking that the fund will recover in sometime. Even after some time the fund is not recovering. what will you do then? you will switch your fund to some new fund which is also chosen without any logics. And the cycle continues…

You should know when to switch and to which fund you should switch. These are the questions you should be asking instead of which mutual fund SIP is best for 5 10 15 years?

Important questions you should know

  • How to select the right mutual fund
  • What is your goal for which you are investing
  • How to review a mutual fund
  • When to get out of a mutual fund
  • How to manage risk in your portfolio

These are the questions you should be focusing on. There are many resources which are focusing on these fundamental questions of selecting the right mutual fund.

You should not look at the products at the first step. Choosing the product is the last step in the investment process. So there is no best mutual fund SIP for 5, 10, 15 years. You have to choose the mutual fund based on the past data, provided you are selecting the right category for your goal. Also, you should know how to review your fund and get out of the fund when the performance is bad.

Please do not ask the wrong question. Wrong questions are easy to ask but those answers are more often wrong. I have shortlisted best mutual fund SIPs based on their comparison with the corresponding benchmarks. Choose the best SIP plan based on your goal and time horizon.

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