First the caveat: If you think that Systematic Investment Plans or SIPs will make windfall or super abnormal gains in 1 or 5 years, you are probably wrong. You need to have a time frame of at least 10 to 15 years, otherwise you have misunderstood the advert campaign "Mutual Funds Sahi Hai".

Returns of some of the popular schemes

Now let us take a look at some of the biggest equity mutual funds in the country and the returns they have provided, to give you an idea, that you should not be expecting abnormal returns.

Aditya Birla Sunlife Frontline Equity Fund on the other hand has given returns of 9.14 in the last one year, 9.34 per cent in the last three years and 16.62 per cent over the last 5 years.

ICICI Prudential Value Discovery Fund has churned out returns of 6.28 per cent in the last one year, 7.34 per cent in the last three years and 17.49 per cent in the last 10 years.

Now, it is important to remember that with effect from April 1, 2018, Long Term Capital Gains on shares for SIPs and equity mutual funds would apply. So, to that extent, your returns are now likely to be reduced by another 10 per cent.

So, SIPs can give you reasonably good returns, but, these days investors expectations from mutual funds have been for abnormal returns. As you can see, from the top three equity mutual funds in the country, the returns are more or less in line with bank deposits in the short to medium term, but, tends to be higher when you have a longer term time frame of 10 years and beyond.

However, the key here is also timing your investments. If you realize that markets have rallied substantially and your returns are superb, there is no harm in partially withdrawing. Many analysts advocate not to withdraw from equity mutual funds. This is not a good balanced suggestion to give. You must take profits off the table and re-invest at lower levels, or face the prospect of eroding your wealth.

This is especially true, if you are investing lumpsum in equity mutual funds.

Now, coming to SIPs for marriage and to meet children's education, the problem again is timing. If the market conditions when there is an event like a marriage in the family is bad, like just after the Lehman Brothers' crisis, you could be in trouble, if you are in need to withdraw the money. Of course, that kind of event is very rare, though you must be warned that you are investing in equity mutual funds, which invest in the stock markets. So, do be prepared for eventualities as well.

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