When it comes to building wealth gradually with discipline and consistency, Systematic Investment Plans (SIPs) have emerged as one of the most effective tools. Especially for investors with a medium-term horizon like 5 years, SIPs can offer decent returns with manageable risks, particularly when invested in the right mutual fund schemes.
In this article, we will explore:
- What SIP is
- Factors to consider before choosing a 5-year SIP
- Types of SIPs suitable for 5 years
- Best SIPs to invest in for 5 years in India (2025)
- Return comparison table
- Tips for maximizing SIP returns
📌 What is SIP and Why is it Popular?
A Systematic Investment Plan (SIP) is a disciplined method of investing a fixed amount in a mutual fund at regular intervals—monthly, quarterly, or weekly.
Why SIP is popular:
- Rupee cost averaging
- Compounding effect
- Flexibility to invest small amounts
- Avoids market timing
A 5-year SIP plan is ideal for moderate risk takers looking for higher returns than traditional savings, without locking in money for too long.
📊 Factors to Consider Before Choosing SIP for 5 Years
Before diving into the best SIPs, it’s important to evaluate the following criteria:
| Factor | Why It Matters |
|---|---|
| Investment Goal | Helps choose the right fund type (growth, income, etc.) |
| Risk Appetite | Determines equity vs hybrid vs debt allocation |
| Fund Performance | Past 5-year CAGR and consistency of returns |
| Fund Manager Track Record | Indicates experience and stability |
| Expense Ratio | Lower expense ratio = higher net returns |
| Fund Size | Bigger AUM often implies higher investor trust and better liquidity |
🧠 Which Type of Mutual Fund is Best for 5-Year SIP?
Let’s understand which categories suit a 5-year investment:
| Fund Type | Risk Level | Expected Returns (5 yrs) | Ideal for |
|---|---|---|---|
| Large Cap Funds | Moderate | 10–12% | Conservative to moderate investors |
| Flexi Cap Funds | Moderate-High | 12–15% | Investors seeking higher returns with balance |
| ELSS (Tax Saving) | Moderate | 10–13% | Tax-saving + long-term wealth creation |
| Hybrid Funds | Low-Moderate | 8–10% | Low-risk takers |
| Debt Funds | Low | 6–8% | Very low-risk investors |
For 5-year goals, Flexi Cap and Large Cap Funds are often ideal, while conservative investors may choose Hybrid or Debt Funds.
⭐ Best SIPs for 5 Years Investment in 2025 (India)
Here are some of the top-performing and reliable mutual funds for a 5-year SIP based on historical performance, fund manager stability, and risk profile:
1. Parag Parikh Flexi Cap Fund
- Type: Flexi Cap
- 5Y CAGR: ~19.5%
- Risk: Moderately High
- Why Invest: Consistent outperformer, global exposure (US tech stocks), low expense ratio
2. Mirae Asset Large Cap Fund
- Type: Large Cap
- 5Y CAGR: ~14.8%
- Risk: Moderate
- Why Invest: High-quality blue-chip exposure, strong track record, suitable for conservative investors
3. Quant Active Fund
- Type: Flexi Cap
- 5Y CAGR: ~23.5%
- Risk: High
- Why Invest: Aggressive management style, suitable for high-risk investors looking for superior returns
4. Axis Bluechip Fund
- Type: Large Cap
- 5Y CAGR: ~12.2%
- Risk: Moderate
- Why Invest: Suitable for investors seeking long-term stability with consistent returns
5. Canara Robeco Equity Hybrid Fund
- Type: Hybrid (Equity + Debt)
- 5Y CAGR: ~11.2%
- Risk: Low to Moderate
- Why Invest: Balanced approach with less volatility, ideal for conservative investors
6. ICICI Prudential Equity & Debt Fund
- Type: Aggressive Hybrid
- 5Y CAGR: ~13.6%
- Risk: Moderate
- Why Invest: Mix of equity and debt for medium risk-takers; ideal for 5-year wealth creation
7. SBI Equity Hybrid Fund
- Type: Hybrid
- 5Y CAGR: ~10.5%
- Risk: Moderate
- Why Invest: Good option for investors seeking steady returns with lower equity exposure
📈 Returns Comparison Table (2020–2025)
| Mutual Fund Name | Category | 5-Year CAGR (%) | Risk Level | Fund Rating (2025) |
|---|---|---|---|---|
| Parag Parikh Flexi Cap Fund | Flexi Cap | 19.5% | Moderately High | 5/5 |
| Quant Active Fund | Flexi Cap | 23.5% | High | 5/5 |
| Mirae Asset Large Cap Fund | Large Cap | 14.8% | Moderate | 4/5 |
| Axis Bluechip Fund | Large Cap | 12.2% | Moderate | 4/5 |
| Canara Robeco Equity Hybrid Fund | Hybrid | 11.2% | Low to Moderate | 4/5 |
| ICICI Prudential Equity & Debt | Aggressive Hybrid | 13.6% | Moderate | 5/5 |
| SBI Equity Hybrid Fund | Hybrid | 10.5% | Moderate | 4/5 |
💡 How Much Should You Invest in SIP for 5 Years?
Here’s how your SIP can grow over 5 years, assuming average annual returns of 12%.
| Monthly SIP (₹) | Investment Amount (5 Years) | Estimated Value (at 12% CAGR) |
|---|---|---|
| ₹1,000 | ₹60,000 | ₹82,000 |
| ₹5,000 | ₹3,00,000 | ₹4,10,000 |
| ₹10,000 | ₹6,00,000 | ₹8,20,000 |
| ₹20,000 | ₹12,00,000 | ₹16,40,000 |
🧾 Taxation on SIP Returns After 5 Years
If your SIP investment is in equity mutual funds:
- Capital gains < ₹1 lakh/year → Tax-free
- Capital gains > ₹1 lakh/year → 10% LTCG tax
For debt or hybrid funds:
- Taxed as long-term capital gain at 20% with indexation if held for 3+ years
Note: ELSS funds have a 3-year lock-in and qualify for Section 80C tax deduction up to ₹1.5 lakh/year.
✔️ Tips to Maximize SIP Returns in 5 Years
- Start Early: The sooner you begin, the greater the compounding benefit.
- Increase SIP Yearly: Use the step-up SIP option to increase contributions.
- Stick to the Plan: Avoid stopping SIPs during market dips; they help you buy low.
- Diversify Smartly: Choose 2-3 different categories (e.g., one large-cap, one flexi-cap).
- Rebalance Every Year: Check portfolio once a year and adjust allocation if needed.
- Avoid Over-diversification: Too many funds dilute returns and increase complexity.
🧮 How to Start SIP Online in 2025?
You can begin investing in SIPs through various platforms:
- Directly via AMC websites (e.g., Parag Parikh, Mirae Asset)
- Online brokers (e.g., Zerodha Coin, Groww, Kuvera, Paytm Money)
- Through banks (ICICI Direct, HDFC Securities)
- Robo-advisors (ET Money, Scripbox, INDmoney)
Required Documents:
- PAN Card
- Aadhaar Card
- Bank Account with ECS enabled
- KYC compliance (can be done online via video KYC)
🏁 Final Thoughts: Which SIP is Best for 5 Years?
There is no single best SIP for everyone. It depends on your financial goals, risk appetite, and return expectations. However, some SIPs that have consistently delivered over a 5-year period in India include:
- Parag Parikh Flexi Cap Fund (for aggressive and long-term growth)
- Mirae Asset Large Cap Fund (for stable, blue-chip exposure)
- ICICI Prudential Equity & Debt Fund (for balanced, hybrid investment)
💬 Recommendation:
If you are starting now in 2025 and want a blend of performance and stability, a combination of Parag Parikh Flexi Cap Fund + Mirae Asset Large Cap Fund is a strong SIP portfolio for the next 5 years.
📚 FAQs: SIP for 5 Years
Q1. Can SIP give good returns in 5 years?
Yes, a well-selected equity or hybrid fund can offer 10–15% annual returns over 5 years.
Q2. Is SIP better than FD for 5 years?
Yes, SIPs in equity funds can outperform FDs significantly over a 5-year horizon.
Q3. Can I withdraw SIP before 5 years?
Yes, except in ELSS funds (3-year lock-in), you can redeem anytime, though early withdrawal may impact returns.
Q4. Which platform is best to start SIP online?
Groww, Zerodha Coin, and AMC direct platforms are popular and easy to use.