SIP - What is it ?

Market may go UP or DOWN, do not shy away from equities.....

Invest through Mutual Funds

Systematic Investment Plan

Systematic Investment Plan (SIP) is a feature especially designed for investors who wish to invest small amounts regularly to build wealth over a long term. Anyone can enroll for SIP by starting an account with any mutual fund by investing as small as Rs.1,000/- per month with 12 post-dated cheques for the future period or by giving bank auto-debit mandate

This disciplined regular investment approach gives you the following advantages: a. Benefit of compounding b. Rupee Cost Averaging c. Convenience

a. Benefit of Compounding : The key to build wealth is to start investing early and to keep investing regularly. These regular amounts of savings no matter however small they may be shall go a long way in creating a substantial amount of wealth over a long-term and help in achieving your ultimate goal of accumulating wealth. For Example if you invest Rs.1000/- per month into any Equity Fund, which may possibly generate an average return of 12%. The following graph clearly illustrates that if a person who had started investing Rs.1000/- per month from the age of 25 years would retire with a booty of Rs. 64 Lacs whereas delaying the same by 5 years and started investing from the age of 30 years would have only fetched him Rs.35 Lacs, a heavy penalty of Rs. 29 Lac for delaying his investment plans by 5 Years.

b. Rupee Cost Averaging : As an Investor, one can suffer from increased anxiety just by following the daily market movements.One day the market is up 300 points and the next day it’s down 200 points. Is it a bear market or a bull market? Should investors sell their stocks or should they buy more? These are all very important factors to consider, especially for those investors who do not have large sum of capital to speculate with and are trying to build a portfolio for a comfortable retirementSuch an investor cannot afford to suffer from such large market fluctuations. The most widely followed techniques to try and level out this bumpy ride is known as “Rupee cost averaging” which means making periodic investments of the same amount of money on a regular basis whether the prices are decreasing or increasing. The same amount of investment will be made in the same mutual fund on the same day of every month, or on the first day of every quarter.

The effect of this is buying fewer units at a higher NAV, or more units at a lower NAV. What Rupee cost averaging can accomplish is a convenient manner in which you can increase your holdings and at the same time take advantage of market fluctuations The graphic illustration of Monthly SIP in a diversified Equity Fund clearly shows that the Actual cost per unit is less than the Actual Average NAV Price.

c. Convenience : Just submit the completed SIP application form with post dated cheques or auto debit mandate. The respective mutual fund will automatically debit your account on the specified date, credit the new freshly alloted units in to your account and send you a new updated statement of account