As investment is gaining ground all around the world, everyone is getting attracted to the high returns of mutual funds. However, most of them back off thinking that they must wait until they earn a considerable amount. What if we can invest in the least amounts possible over a long period?
What is a mutual fund and how does it work?
- The money invested by many people is accumulated to form a single holding.
- The holding can invest in stocks, bonds, etc.
- The mutual fund is managed by a team of professionals who are experts in picking the stocks which can achieve good returns.
- The predominant feature of mutual funds is that an investor can gain exposure irrespective of the amount he/she invested.
Types of Investment in best mutual funds
There are wide varieties of best mutual funds designed to cater to the needs of an investor.
When it comes to the amount of investment, there are two popular modes of investment. They are:
- SIP
- Lump sum
What is SIP?
- Through a Systematic Investment Plan, investors can invest a certain amount in mutual funds at regular intervals.
- The amount of SIP is the choice of the investor. After considering one’s financial goal and the type of mutual fund, an investor will be able to decide on the SIP.
- The minimum amount required for a SIP is Rs.500.
- By investing amounts as low as Rs.500 or Rs.1000, one can gain good returns in a long term.
- Below are the best mutual funds from various categories with a minimum investment.
ELSS Mutual Funds
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | SIP |
| Aditya Birla Sun Life Tax Relief 96 | 32.760 | 13.9 | 16.1 | 23.8 | 500 |
| Reliance Tax Saver Fund | 57.380 | -6.1 | 10.2 | 22.5 | 500 |
Large-cap Mutual funds:
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | SIP |
| Reliance Top 200 Fund | 32.5495 | 22.03 | 9.42 | 18.89 | 100 |
| SBI Bluechip Fund | 38.3468 | 3.42 | 11.94 | 18.91 | 500 |
Mid-cap Mutual Funds
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | SIP |
| L&T mid cap fund | 139.1600 | 1.15 | 17.39 | 29.88 | 500 |
| L&T India value fund | 36.6750 | 1.22 | 15.25 | 25.75 | 500 |
Multi-cap Mutual Funds
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | SIP |
| DSP Blackrock Opportunities fund | Rs. 232.379 | 27.99 | 23.28 | 24.27 | 500 |
| Motilal Oswal MOSt Focused Multi-cap 35 Fund | 26.3221 | -0.89 | 15.55 | N.A. | 1000 |
Debt Mutual Funds
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | SIP |
| Reliance Floating Rate Fund | 10.0963 | 3.61 | 6.90 | 8.01 | 100 |
| Franklin India Low Duration Fund | 20.5899 | 7.03 | 8.77 | 9.32 | 500 |
If we observe the above details, the amount of SIP of a few funds was Rs.100. Thus, an investment in mutual funds can start at the very minimum.
Lump Sum Investments:
- Lump sum investment is where an investor invests a big corpus at one go.
- The minimum amount of investment is Rs.5000 for a lump sum. The minimum amount might vary in case of some schemes.
- Usually, investors choose lump sum method to dump all their surplus money.
- However, by investing in a lump sum, the investor gets a diversified portfolio rather than investing in a single mutual fund.
- The investor opting to put a lump sum should have a good appetite for risk and must be a long-term investor. Then due to compound, the lump sum can make the investor turn out very wealthy.
Details of best mutual funds suitable for lump sum investments:
Debt Mutual Funds
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | Minimum Investment (Rs) |
| HDFC Short Term Opportunities Fund | 19.6001 | 5.18 | 7.49 | 8.55 | 5000 |
| Franklin India Ultra-Short Bond Fund | 24.9644 | 7.56 | 8.88 | 8.88 | 10000 |
| DHFL Pramerica Short Maturity Fund | 21.5311 | 4.15 | 7.53 | 8.45 | 5000 |
| ICICI Prudential MIP 25 | 40.3833 | 3.71 | 9.46 | 12.06 | 5000 |
| Franklin India Low Duration Fund | 20.5899 | 7.03 | 8.77 | 9.32 | 10000 |
| Franklin India STIP | 3759.0781 | 5.99 | 8.16 | 9.24 | 5000 |
| Principal Cash Management Fund | 1727.6406 | 5.89 | 6.94 | 7.83 | 5000 |
| Aditya Birla Sun Life Corporate Bond Fund | 67.6131 | 4.44 | 7.65 | 8.70 | 1000 |
Large Cap Equity Mutual Funds
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | Minimum Investment (Rs) |
| Reliance Large Cap Fund | 34.1853 | 12.4 | 14.2 | 20.6 | 5000 |
| ICICI Prudential Bluechip Fund | 42.01 | 10 | 14.8 | 17.6 | 5000 |
| India bulls Blue Chip Fund | 20.65 | 6.4 | 12.7 | 14.5 | 500 |
| Aditya Birla Sun Life Frontline Equity Fund | 222.95 | 4.4 | 12.8 | 17.8 | 1000 |
| SBI Bluechip Fund | 38.3468 | 3.4 | 12 | 18.9 | 5000 |
Mid Cap Equity Mutual Funds
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | Minimum Investment (Rs) |
| L&T Midcap Fund | 139.16 | 1.1 | 17.4 | 29.9 | 5000 |
| Kotak Emerging Equity Scheme | 38.555 | 2.4 | 14.9 | 29.6 | 5000 |
| Sundaram Mid Cap Fund | 486.547 | -1.4 | 13.3 | 26.5 | 5000 |
| BNP Paribas Mid Cap Fund | 32.412 | -5.3 | 10 | 23.1 | 5000 |
| Motilal Oswal Midcap 30 Fund | 26.1425 | 0.792 | 0.792 | N. A | 5000 |
Small Cap Mutual Funds
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | Minimum Investment (Rs) |
| L&T Emerging Businesses Fund | 26.569 | 5.4 | 23.2 | N. A | 5000 |
| Aditya Birla Sun Life Small Cap Fund | 37.6712 | -2.7 | 16.4 | 27.2
| 1000 |
| Reliance Small Cap Fund | 43.4807 | 9.8 | 21.8 | 37.3 | 5000 |
| Franklin India Smaller Companies Fund | 56.0348 | -1.3 | 14.3 | 29.1 | 5000 |
| HDFC Small Cap Fund | 45.246 | 19.6 | 22.1 | 24.5 | 5000 |
Diversified/Multi Cap Equity Mutual Fund
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | Minimum Investment (Rs) |
| Motilal Oswal Multi-cap 35 Fund | 26.3221 | -0.888
| 15.6 | N. A | 5,000 |
| Kotak Standard Multi-cap Fund | 34.297 | 6 | 15.2 | 21.9 | 5,000 |
| Principal Multi Cap Growth Fund | 144.88 | 6.8 | 15.2 | 21.9 | 5,000 |
| IDFC Focused Equity Fund | 38.93 | 2.9 | 15.4 | 15.3 | 5,000 |
| SBI Magnum Multi-cap Fund | 47.6703 | 4.4 | 14.8 | 22.2 | 1000 |
Sector Equity Mutual Funds
| Mutual Fund | NAV (in Rs) | 1-year returns (%) | 3-year returns (%) | 5-year returns (%) | Minimum Investment (Rs) |
| Franklin Build India Fund | 40.4182 | 4.8 | 13.4 | 26.2 | 5000 |
| Sundaram Rural and Consumption Fund | 42.1047 | 0.889 | 19 | 23.2 | 5000 |
| Aditya Birla Sun Life Banking and Financial Services Fund | 28.59 | 0.74 | 21.9 | N. A | 1000 |
| ICICI Prudential Banking and Financial Services Fund | 60.68 | -0.197 | 20 | 26.1 | 5000 |
| DSP BlackRock Natural Resources and New Energy Fund | 34.25 | -1.9 | 26.8 | 25.3 | 1000 |
The Whole point
Now we understand that whether it is SIP or Lump sum, an investor needs a minimum of Rs.500- Rs.5000 to begin. Even with the minimum amount, there are various options available.
So, what’s stopping you? Make your portfolio, start investing and reach your goals.
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