70-20-10 Rule in SIP 2025 – Smart Asset Allocation Strategy
SIP Investment 70:20:10 Rule: Although the equity market has provided and continues to provide excellent returns, people are now focusing more on mutual funds. Instead of investing in risky assets, investors are opting to invest in Systematic Investment Plans (SIPs)
SIP Investment 70:20:10 Rule: Currently, the Indian stock markets are experiencing a volatile rally. However, safe investments still remain the most popular choice. Despite the impressive returns in the equity market, investors are now focusing more on mutual funds. Within this, investors are opting to invest in Systematic Investment Plans (SIP) rather than putting their money in risky assets. However, if one wants to accelerate profits, it is necessary to follow a rule. Understanding this rule is crucial.
How to invest?
Financial planners recommend SIP investors to follow the 70:20:10 rule. This not only increases investments but also boosts profits. The 70:20:10 rule means allocating 70% to large-cap funds, 20% to mid-cap funds, and 10% to small-cap funds. Remember, if you haven’t invested in this way yet or if there is a need to rebalance your portfolio, do it without fail. This is a fundamental rule of investment and will never cause any trouble in your portfolio|
What has been the return of SIP in the last three years?
– According to the data, the average SIP return for large-cap funds has been between 22% and 24.95% over a period of 3 years|
– On the other hand, the return for large and mid-cap funds has been between 25.35% and 28.33%|
– Multi-cap funds have shown a return between 24.26% and 30.22%|
– Mid-cap funds have an average return between 30.06% and 35.24%|
– Small-cap funds have recorded a return between 33.27% and 38.09%|
When and how do we benefit?
Financial planners believe that the timing for SIP has always been good. However, if someone has not entered into it yet, then it is not too late. As much as the market seems to be growing, there are more chances of consolidation in the future. Small investors should continue to hold onto their investments. During market downturns, there is an opportunity for SIP investors, while the market is rising, the pace of returns increases.
Due to the decrease in SIP prices during market declines, investors can get more units of the scheme. Similarly, diversified portfolios in a bull market benefit from the 70:20:10 rule in investments|
What is the recommended investment period?
According to financial planners, investors should plan for a period of 8-10 years in equity mutual funds. The number of investors investing through SIP has consistently increased in the last 3 years.
Many new investors are also opting for SIPs to achieve their financial goals. The SIP contribution figure has crossed 1 trillion in FY24. As per the data from the Association of Mutual Funds in India (AMFI), the total number of SIP accounts has reached 7.44 crore in the financial year 2023-24|
FAQ – SIP में 70:20:10 नियम
Q. 1. SIP में 70:20:10 का नियम क्या होता है?
Ans. SIP में 70:20:10 नियम का मतलब है – आपकी कुल निवेश राशि को 3 हिस्सों में बाँटना:
- 70% – Large Cap Funds में (सुरक्षित और स्थिर रिटर्न के लिए)
- 20% – Mid Cap Funds में (थोड़ा जोखिम, लेकिन बेहतर रिटर्न की संभावना)
- 10% – Small Cap Funds में (अधिक जोखिम, पर high return potential)
Q. 2. इस नियम का क्या लाभ है?
Ans.
– Diversification (विविधता): अलग-अलग रिस्क लेवल के फंड में निवेश होता है
– Risk Management: ज्यादा जोखिम वाले फंड में कम पैसा जाता है
– Stable Growth: Long-term में wealth creation के लिए संतुलित तरीका है
Q. 3. क्या सभी investors के लिए ये rule सही है?
Ans. नहीं, यह rule खासतौर पर beginner investors और medium risk profile वालों के लिए है। अगर आप ज्यादा रिस्क ले सकते हैं, तो proportion बदल सकते हैं।
Q. 4. इस rule को follow करने के लिए कौन-कौन से SIP फंड चुने जा सकते हैं?
Ans. उदाहरण:
– Large Cap SIP: Axis Bluechip Fund, ICICI Prudential Bluechip
– Mid Cap SIP: Kotak Emerging Equity, DSP Midcap
– Small Cap SIP: Nippon India Small Cap, SBI Small Cap Fund
(निवेश करने से पहले अपने financial advisor से सलाह लें)
Q. 5. क्या 70:20:10 rule को सालाना rebalance करना जरूरी है?
हाँ, साल में 1 बार portfolio को review और rebalance करना चाहिए, ताकि निवेश का अनुपात (ratio) सही बना रहे और market risk को manage किया जा सके।
Frequently Asked Questions (FAQ)
Q1: What is the 70-20-10 Rule in SIP?
A1: The 70-20-10 Rule in SIP is an asset allocation strategy where 70% of your investment goes to low-to-medium risk funds, 20% to moderate growth funds, and 10% to high-risk, high-return funds.
Q2: How can I apply the 70-20-10 Rule in SIP?
A2: For example, if you invest ₹10,000 monthly, allocate ₹7,000 to large-cap/index funds, ₹2,000 to mid-cap or balanced funds, and ₹1,000 to small-cap or sectoral funds.
Q3: Is the 70-20-10 Rule suitable for all investors?
A3: It works as a guideline for most investors, but individual risk appetite, financial goals, and investment horizon should be considered before applying this rule.
Q4: Can I modify the 70-20-10 allocation?
A4: Yes, the rule can be adjusted according to personal risk tolerance or market conditions, but maintaining a balanced allocation is recommended.
Q5: Does this rule guarantee returns?
A5: No, the 70-20-10 Rule helps manage risk and diversification but does not guarantee returns as SIPs are subject to market fluctuations.
Conclusion
The 70-20-10 Rule in SIP is a simple yet effective way to maintain a balanced investment portfolio. By allocating funds across different risk levels, investors can reduce overall risk while aiming for better long-term returns. Following this rule consistently and reviewing periodically can help achieve financial goals in a disciplined manner.
Disclaimer
This content is for educational and informational purposes only. The 70-20-10 Rule in SIP may not be suitable for everyone, and past performance does not guarantee future results. Please consult a certified financial advisor before making any investment decisions.
