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Benefits

Systematic Investment Plan (SIP) is not a product but a method or the process of investing regularly i.e. at fixed intervals, say monthly or quarterly . A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help you save regularly. It is just like a recurring deposit with the post office or bank where you put in a small amount every month. The difference here is that the amount is invested in a mutual fund.

Benefits of SIP

Making Market Fluctation Work for You

 

Predicting the market and prices is almost impossible. Most of the investors burn their figure when they purchase at high prices and sell when the prices are low. But if they program their investment through SIP , then can take advantage of investing as , every particular period their saving get automatically invested. Rupee Cost Averaging is a strategy of investing a fixed amount of money at regular interval, you can take advantage of market dips without worrying about when they'll occur. Your money buys more units when the price is low and fewer when the price is high, which can mean a lower average cost per share over time.

   
 

The most important element of rupee-cost averaging is commitment. How frequently you invest (monthly, quarterly or even annually) is less important than sticking to your investment schedule

   
 

Making Volatility Work For You

Month

Amount Invested

Sale Price

No. of Unit Purchased

1.

1000

12

83.333

2.

1000

15

66.667

3.

1000

9

111.111

4.

1000

12

83.333

Total

10,000

48

344.444

Average Sales Price of unit : Rs 12 (i.e Rs 48/4 months)

Average Purchase Cost of unit : Rs 11.61 (i.e Rs 4000/344.444 units)

   

Chasing Your Goals And Desires Systematically

 

Thing big Start small......Every person has to provide money to persue goal and desires in life , like Children’s education and marriage, medical expenses, car, house, holiday trips , retirement . But how do you get started, especially if you don't have a large sum of money? By planning and allocating a fixed amount as SIP an investor can plan for various goals in comfortable and effective way.

   

Warren Buffet's Secret Weapon : Power of Compounding

 

As a child you were told that if you had one penny and doubled in a year, you would have two pennies. Now, if you had two pennies in Year 2 and you doubled that amount , you would have four pennies. If you kept this process up for a period of twenty-seven year - .01,.02,.04,.08,.16,.32,.64,1.28 – you would increase your $ .01 from year 1 to $ 1.3 million in twenty seventh year. This is what Mr Buffet did in 27 years.

   
 

Compounding is the financial equivalent of a snowball rolling downhill. With each revolution, the snowball gets bigger because it picks up even more snow every time around. Compounding produces a snowball effect with money because the earnings each year contribute a little more to earnings the following year. As time passes, the earnings contribute more and more to the total value of an investment.

 

Magic of Power of Compounding

Power of More

The more you earn make a Difference

Rs.1000 invested p.m @ Growth rate

Value after10 Years

Value after 25 Years

5 %

1,55,929

5,97,991

7 %

1,74,094

8,14,797

10 %

2,06,552

13,37,890

14 %

2,62,091

27,27,278

 

Power of Now

The Sooner You Start make a Difference

Rs.1000 invested p.m@ the8% p.a till the age of 60

Total Amount Saved

Value at age of 60

Starting Age

   

25

4,20,000

23,09,175

30

3,60,000

15,00,295

35

3,00,000

9,57,367

40

2,40,000

5,92,947

 

Power of Growth

The more you earn make a Difference

Rs.1000 invested p.m@ Growth rate

Value after 10 Years

Value after 25 Years

5 %

1,55,929

5,97,991

7 %

1,74,094

8,14,797

10 %

2,06,552

13,37,890

14 %

2,62,091

27,27,278

 
 

Discipline is Key

   
 

Being disciplined - It’s the key to investing success. In real life it’s very difficult to invest regularly.

Investors who adopt a short-sighted, 'get rich quick' approach by trying to time the stock market may succeed once or twice, but the truth is that no one can predict with consistent success where the market will head next, not even the experts. Hence, the key is discipline and systematic investing helps you to become a disciplined investor.

   
 
 

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