Best SIP To Invest In India: Exploring SIP In Bonds For Stable Returns
Investing aggressively in equities and small-cap mutual funds can yield high returns, but market downturns can significantly impact liquidity and overall gains. Many investors focus solely on stocks and SIPs in equity funds while overlooking fixed-income options like bonds.
Market cycles are unpredictable, and even the best-performing stocks can deliver negative returns during bear phases. To ensure stability and consistent growth, diversifying with SIPs in bonds is a smart strategy. Putting money in bonds can be one of the best SIP to invest in and improve the performance of your portfolio. They offer predictable returns, reduce portfolio risk, and provide liquidity, making them a valuable addition to any investment plan.
Another important consideration is whether to invest through SIPs or a lump sum. While both have their advantages, SIPs in bonds provide the benefit of rupee cost averaging, reducing the impact of market volatility. They also leverage the power of compounding, helping investors build a substantial portfolio over time. By investing systematically, you can achieve long-term wealth creation while maintaining stability in your investment journey. Here’s why SIP in bonds can be a smart financial decision.
Why Invest in SIPs?
If you have consistent income (like salaries or profit from business), an SIP-based investment can be an excellent investment decision. It is not just for beginners; seasoned investors should also consider investing in a phased manner by selecting an SIP Investment.
Here are the most critical benefits of choosing SIPs:
1. Rupee Cost Averaging: This eliminates the risks of pouring a significant amount of money during market highs that can take months and years to recover. Since investments are made regularly, investors buy more units when prices are low and fewer when prices are high. This smoothens the overall purchase cost, reducing the impact of market fluctuations.
2. Power Of Compounding: If you are committed to long-term investing, you can reap the benefits of compounding, whereby your money grows exponentially after a given period of continuous investment.
3. Risk Diversification: To diversify overall risks, you need to have stable and consistent returns from investments such as bonds in your portfolio. Hence, it is highly recommended that you go for a corporate bond SIP or select other fixed-income securities in your portfolio.
Not sure how much to invest? Use our SIP calculator to estimate your returns based on investment amount, tenure, and expected interest rate. This tool helps in goal-based financial planning and understanding potential gains before committing.
Types Of SIP Investment Options In India
There are three major categories of SIP investment in India. You can choose any of the alternatives as per your investment requirements:
1. Equity SIP: Involves investing in equity mutual funds or stocks through SIP. They offer high-growth potential but come with market volatility. These suit investors looking for higher returns and have a greater risk tolerance.
2. Debt SIP: Ideal for conservative investors, debt SIPs invest in debt mutual funds, corporate bonds, or government securities (G-Secs). These offer stable returns and capital preservation.
3. SIP In Bonds: This is a growing investment choice that involves investing in corporate bonds, Securitized Debt Instruments (SDIs), and government-backed bonds. Bonds provide fixed-income stability and are suitable for risk-averse investors and investors looking to diversify their portfolios and get stable returns.
SIP In Bonds: A Safe And High-Yield Alternative
How Does SIP In Bonds Work?
SIP in bonds allow investors to put a fixed amount in regular intervals into different bonds including corporate, government, or other fixed-income bonds. Rather than going for a lump sum investment, which carries the risk of entering the investment market at historically high prices, investors acquire units gradually, thereby reducing risks and enhancing long-term returns.
Enhancing Liquidity In Bond Investments With Grip Invest
One of the biggest hurdles for bond investors has always been limited liquidity. Traditionally, bonds require a long-term commitment until maturity, making early exits challenging. Selling bonds before maturity often means struggling to find buyers or securing a fair market price, which can create financial constraints.
To solve this issue, Grip Invest has launched the "Sell Bonds Anytime" feature, offering greater flexibility.
- Exit your bond investments after just 2 months
- Get competitive price offers from multiple buyers for fair value discovery
- Seamless digital process with settlements completed within one business day
This innovative feature enhances liquidity, giving investors more control and freedom in their fixed-income investments, making bond investing more flexible and accessible than ever.
Why Is SIP In Bonds Gaining Popularity In India?
SIP in Bonds is gaining popularity because of its safety, predictable returns, and inflation-hedging benefits. If you invest in bond SIPs, you get access to fixed interest payouts, which is perfect for portfolio diversification and ensuring stable returns without too much equity exposure.
Best SIP In Bonds To Invest In India
There are several options available for bond investments. Here are some of the best SIPs in bonds in India that you can consider:
Bond SIP Type | Fund | Annualized Returns (3-Year) |
Corporate Bond | ICICI Prudential Corporate Bond Fund | 7.83% |
Corporate Bond | Axis Corporate Bond Fund | 7.20% |
Corporate Bond | HDFC Corporate Bond Fund | 7.82% |
Government Bond | ICICI Prudential Gilt Fund Direct Plan | 8.06% |
Government Bond | SBI Magnum Gilt Fund Direct Growth | 7.73% |
Dynamic Bond Funds SIP | UTI Dynamic Bond Fund | 9.47% |
Dynamic Bond Funds SIP | Aditya Birla Sun Life Dynamic Bond Fund | 7.58% |
You can invest in a lump sum or start an SIP in these bonds. The minimum amount of investment ranges between INR100 to INR1000 per investment.
SIP In Bonds vs SIP In Mutual Funds: Which One Is Better?
Here is a table showing the comparison between SIP in bonds and SIP in Mutual Funds:
Factors | SIP In Bonds | SIP In MF |
Returns | Offers fixed interest rates with predictable returns, typically ranging from 6% to 9% p.a., depending on the bond type (corporate, government, or tax-free). | Returns vary based on market performance. Equity mutual funds can provide 12-15% p.a., while debt mutual funds may offer 6-8% p.a. |
Risk | Bonds are less risky as they provide stable returns. However, credit risk (default by issuer) and interest rate risk (price fluctuations) exist. | There is higher risk, especially in equity mutual funds, due to market volatility. Debt mutual funds face interest rate and credit risk but are still riskier than bonds. |
Liquidity | These have moderate liquidity since bonds have a lock-in period, and selling before maturity may lead to losses. However, some listed bonds allow secondary market selling. | These are highly liquid since most open-ended mutual funds can be redeemed anytime (subject to exit loads in some cases). Debt mutual funds offer quicker redemption than bonds. |
- Choose SIP in Bonds if you prefer stable, fixed returns with lower risk.
- Choose SIP in Mutual Funds if you seek higher returns and are comfortable with market volatility.
A hybrid approach—investing in both bonds and mutual funds—can provide the best balance between growth and stability.
Summing Up
If you’re looking to diversify your portfolio, investing in SIPs in bonds can be a smart choice. Bonds offer a safe and predictable investment route, making them ideal for conservative investors seeking fixed returns with minimal risk. You can log in to Grip Invest and get access to curated corporate bonds, allowing investors to build a stable fixed-income portfolio with ease.
However, it’s essential to compare different bond SIP options from leading financial institutions and choose based on your risk appetite, financial goals, and investment horizon. No matter your strategy, SIPs in bonds can help you achieve portfolio diversification, steady returns, and long-term financial stability.
Frequently Asked Questions In SIP In Bonds
1. Which SIP is best for 5 years from now?
The best SIP for a 5-year investment horizon depends on your risk appetite. Debt mutual funds and corporate bond SIPs offer stable returns with lower risk, while balanced hybrid funds provide a mix of growth and safety.
2. Is monthly SIP good?
Yes, a monthly SIP is a great way to build wealth gradually, leverage rupee cost averaging, and reduce market volatility risks. It ensures disciplined investing without the burden of a large lump sum.
3. What is the best SIP to invest in India for stable returns?
Government bond SIPs, corporate bond SIPs, and high-rated debt mutual funds offer stable returns with minimal risk, making them ideal for conservative investors.
4. How much return can I expect from SIP in bonds?
Returns vary depending on the bond type. Government bonds and high-rated corporate bonds typically offer 6-9% annual returns, while securitized debt instruments (SDIs) may provide slightly higher yields.
5. What is the minimum investment required for SIP in bonds?
The minimum investment for SIP in bonds varies by provider but generally starts from INR500 to INR1,000 per month for debt mutual funds and bond SIPs. Some corporate bond platforms may have higher minimums.
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Disclaimer - Investments in debt securities/municipal debt securities/securitised debt instruments are subject to risks including delay and/ or default in payment. Read all the offer related documents carefully. The investor is requested to take into consideration all the risk factors before the commencement of trading.
This communication is prepared by Grip Broking Private Limited (bearing SEBI Registration No. INZ000312836 and NSE ID 90319) and/or its affiliate/ group company(ies) (together referred to as “Grip”) and the contents of this disclaimer are applicable to this document and any and all written or oral communication(s) made by Grip or its directors, employees, associates, representatives and agents. This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip does not guarantee or assure any return on investments and accepts no liability for consequences of any actions taken based on the information provided. For more details, please visit www.gripinvest.in
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