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SIP
Systematic Investment Plan
(Simplest Solution to Wealth Creation)
RR Investor Capital Services
RR Investor Capital Services
Birth & Education Earning Years Retirement
38 yrs22 yrs
Housing
Child Education
Children’s Marriage
Phase I Phase IIIPhase IIIncome
Age
Marriage
Children
22 yrs 60 yrs
FINANCIAL PLANNING FOR THE FUTURE
Do You Want To Compromise On Your Living Standard After
Your Retirement ?
Savings of Rs 100000 will minify year after year,due to ….
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A SIMPLE SOLUTION TO WEALTH CREATION
“SUCCESS COMES SIMPLY BY DOING SIMPLE THINGS…”
MEANS TO ACHIEVE GOALS
INVEST EARLY +
INVEST REGULARLY (DISCIPLINED SAVINGS)+
INVEST CORRECTLY (RIGHT ASSET CLASS )=
WEALTH CREATION
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COMMON FEARS
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EXCUSES AND JUSTIFICATIONS
• I do not have enough money to invest.Ans : Minimum Amount require for SIP is as low as Rs 500
• I am too busy making money to worry about managing it.Ans : Fund Manager of any respective SIP mutual fund scheme
will manage your money .
• I do not have the time Ans :Auto Debit System for paying the installments will save your
money and energy.
• I don’t have expertise to follow market movements and make investments at the right time.
Ans: There is no need to time the market.
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SIP is an investment program that allows you to contribute a fixed amount in mutual funds at regular intervals .
• Invest a fixed sum every month. (6 months to perpetual - through post-dated cheques or Direct Debit facilities) .
• Fewer units when the share prices are high, and more units when the share prices are low. Average cost price tends to fall below the --average NAV .
Merits of SIP – Discipline Investor (Think of each SIP payment as laying a
brick. One by one, you’ll see them transform into a building. You’ll see your investments accrue month after month)
Power of Compounding Rupee Cost Averaging Hassle FreeRR Investor Capital Services
SIP SYNOPSIS
JAMES
BOND
BENEFITS OF EARLY INVESTING
JAMES BOND
Starting Age 25 years 40 years
Monthly SIP Rs.5,000/ Rs.15,000/
Saving Years till Age 60 35 years 20 years
Total Amount Invested Rs.22 lacs Rs.36 lacs
Wealth at Age 60 years Rs.26 crores Rs4.80crores
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WHY ASSET ALLOCATION IS IMPORTANT
6
186984169 68933513 20769838 3013545
24 20 15
Amount after 30 years
200000000
150000000
100000000
50000000
• Systematic Investment plan (S.I.P) of Rs 3000 per month invested for 30 years and compounding at 24% annually will grow to Rs 18.69crores
• The same amount invested at 20% annually will grow to Rs 6.89 crores.
• Now if the return is changed to a conservative 15% the amount would be Rs 2.07 crores.
• The same amount invested in a Bank at 6 % per annum will grow to a paltry Rs 30.13 lacs. You actually destroy wealth by putting money into Bank and post office deposits.
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Preeti started investing at the age of 25. She invested Rs.10,000
each year for 35 years and then she stopped contributing. Rohit started investing at the of age 35 and then invested
Rs.10,000 each year for 25 years.
If they have invested Rs 10,000 annually till 35 years then they could have fetched Rs 1.013 crore
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POWER OF COMPOUNDING
25 30 35 40 45 50 55 60
24.6 lacs
25 year old Preeti invests Rs.10000 annually for 10 years and stops. She does not withdraw any money.
Rohit begins investingat 35 a similar amountof Rs.10000 annually. He invests for the next25 years and he too does not withdraw any money.
24.6lacs
76.9 lacs
1.01crore
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Thank You
By investing through SIP, you end up buying more units when the price is low and fewer units when the price is high. However, over a period of time these market fluctuations are generally averaged. And the average cost of your investment is often reduced.
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Graphical Presentation
RUPEE COST AVERAGING
• It is a hassle-free mode of investment since you can issue standing instructions for the regular transfers of money into your SIPs.
• SIPs inculcate the savings habit in investors.
• On a regular basis you put aside affordable sums of money and without realising it, over the long run you could amass great wealth
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HASSLE FREE
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Rs.80000 invested in lumpsum at inception in Pru ICICI Tech vs. Rs.1000 invested every month
(for 82 months) since inception
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Lumpsum Invstt Sip Invstt
Performance of lump sum investment depends on the price at which they are bought
EXAMPLE OF LUMPSUM vs. SIP
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• Those who invested in mutual funds through the systematic investment plan (SIP) route benefited the most from fluctuating share prices over the past 2-3 years.
• Top equity diversified funds have returned 16-18% in three years, SIP investors have earned returns in the range of 25-28% (investing into the same funds) during the same period.
• Supposing an investor has invested Rs 1,000 every month (between November 23, 2006 and November 23, 2009), he would have pocketed a 31% return on his Sundaram BNP SMILE Fund, 29% on ICICI Prudential Discovery Fund and 28% on his HDFC Equity Fund. Sensex three-year return being 25% on a compounded basis
Source : Economic Times
SIP Investors beat equity MF peers in returns race
Thank you
Happy Investing
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