Systematic Investment Plans (SIP)
What is SIP? Investing systematically provides for benefits of ; Inculcating savings habit Systematic Investment Plan (SIP) is a method of investing a fixed sum, regularly, in a mutual fund scheme. An ideal way for first-time investors to enter capital markets with an aspiration to create wealth SIP helps investors create wealth by investing fixed sums of money every month over a period of time. Protection against market volatility Long term wealth creation
We all know..sip 1. Inculcates habit 2. Aims to protect against market volatility 3. Aims to eliminate need for timing markets 4. Helps 5. Aims to create long term wealth
Little by little. You can save a lot Your typical spends on weekends A dinner for your family Movie for 2 Buying new clothes What if you save a bit? Rs. 10000 pm saved over 10 years is Rs. 12 Lakhs SIP is a disciplined way to save small amounts month on month
We all know..sip 1. Inculcates habit 2. Aims to protect against market volatility 3. Aims to eliminate need for timing markets 4. Helps 5. Aims to create long term wealth
SIP Aims to protect against market volatility Disciplined & Constant Interval Buying has helped tide over the volatility Nifty 50 has given 13.42% SIP returns over last 15 yrs!!!! Past performance may or may not be sustained in future. Monthly SIP done from 1 st July 2001 to 30 th June 2016. Refer to slide for details of SIP working. Refer to last page for methodology
We all know..sip 1. Inculcates habit 2. Aims to protect against market volatility 3. Aims to eliminate need for timing markets 4. Helps 5. Aims to create long term wealth
SIP Aims to eliminate need for timing markets Rolling Returns of BSE Sensex over 3,5 & 10 years since 1 st Jan 1980 till 30 th June 2016 highlighting instances of Past performance may or may not be sustained in future. (Refer to last page for methodology)
We all know..sip 1. Inculcates habit 2. Aims to protect against market volatility 3. Aims to eliminate need for timing markets 4. Helps 5. Aims to create long term wealth
SIP Helps rupee cost averaging By timing the market, an investor usually misses out the rally or enters the market at the wrong time Regular investing helps spread investments and reduces the average cost per unit by - buying fewer units during rising markets - buying more units during falling markets Year Fixed Investment Price Units 1 10,000 100 100 2 10,000 150 67 3 10,000 75 133 Total 30,000 325 300 Average Cost = 30,000/300 = 100 Average Price = 325 / 3 = 108 Average Cost < Average Price
We all know..sip 1. Inculcates habit 2. Aims to protect against market volatility 3. Aims to eliminate need for timing markets 4. Helps 5. Aims to create long term wealth
SIP Aims to create Long term Wealth Power of Compounding : A little now can mean a lot later You invested Rs.10,000 every month for 30 years At 7% your money will grow into Rs.1.20 crs At 15% your money would have grown to Rs.7 crs Note The above graph is only for illustration purposes, purely to explain the concept of SIP and power of compounding. For eg, If one had done SIP of Rs 10,000 p.m over 30 yrs @ 7% p.a (rate of interest assumed), his money would have grown to the Rs 122 lakhs over his time period.
SIP Aims to create Long term Wealth Growth Potential of Equities leading to Creation of Wealth SIP returns in Nifty 50 Index 18 lac invested in Nifty 50 has grown to 53 lacs over 15 yrs! (i.e from 1 st July 2001 to 30 th June 2016) SIP @ 10000 p.m as on 30 th June 2016. Refer common disclaimer for more details on methodology. Past performance may or may not be sustained in future.
Systematic Investment Plan (SIP) can be a Bridge Between Goal & Accomplishment
SIP Goal based Long term investing tool Child s Education Housing Retirement Child s Marriage Car Everyone has one or more of the above reasons to invest for!
COMMON DISCLAIMER FOR PERFORMANCE SNAPSHOT OF SYSTEMATIC INVESTMENT PLAN (SIP) RETURNS Common Source: BSE India, NSE India & MFI Explorer Past performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other investment. Returns on SIP in Nifty 50 are annualised and cumulative investment return for cash flows resulting out of uniform and regular monthly subscriptions have been worked out on excel spreadsheet function known as XIRR. It is assumed that a SIP of Rs. 10,000/- each executed on 1 st of every month has been taken into consideration including the first installment. It may please be noted that load has not been taken into consideration. The amounts invested in SIP and the market values of such investments at respective periodic intervals thereof are simulated for illustrative purposes for understanding the concept of SIP. This illustration should not be construed as a promise, guarantee on or a forecast of any minimum returns. The Mutual Fund or the Investment Manager does not assure any safeguard of capital and the illustrated returns are not necessarily indicative of future results and may not necessarily provide a basis for comparison with other investments. SIP does not guarantee or assure any protection against losses in declining market conditions. Investors are requested to consult their financial advisor before making any investment decisions. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 16 of
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