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One can invest in mutual funds regular sums
of money through the Systematic Investment Plan thereby making
the volatility of the securities market work in his favour. Since
the amount invested per month/quarter is constant, the investor
ends up buying more units when the price is low and fewer units
when the price is high. Therefore, the average unit cost will
always be less than the average sale price per unit irrespective
of the market rising, falling or fluctuating. This concept is
called "Rupee Cost Averaging". The investors
can gain automatically without having to monitor the market or
attempt to predict the market for purchasing the units.
From the enclosed table, you may be pleasantly surprised on the
benefits of investing systematically over the long term. An investment
of Rs 1000/- per month, in a mix of instruments yielding a net
compounded return of 15% per annum over a period of 25 years, can
grow to over Rs.27 lacs. The table below illustrates how a regular
investment of Rs. 1,000/-per month grows over different time periods.
While SIP is ideal for investing in Equity Funds
nut should be used by all business and salaried class persons
to save a fixed sum every month in whichever fund that suites
their need and psychology. |
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Systematic Investment
Plan (SIP) - An Open End Monthly Income Scheme
The first step, that may take you a long way towards achieving
your financial goals. |
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| The Systematic Investment Plan (SIP) allows
investor to save a fixed amount of rupees every month/quarter for
purchasing additional units of Income (Debt) as also other schemes
like Growth (Equity) and Balanced Funds and is ideal for meeting
the following needs: |
- Higher education of children.
- Decent Marriage of one's daughter.
- Setting up one's son in business or profession.
- Acquiring House/ Flat
- Retirement needs.
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| Look at the following table and you may be pleasantly
surprised on the benefits of investing systematically over the
long term. An investment of Rs 1000/- per month, in a mix of instruments
yielding a net compounded return of Rs 15% per annum, over a period
of 25 years, can grow to over Rs27 lacs. The table below illustrates
how a regular investment of Rs. 1,000/-per month grows over different
time periods. |
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5 |
60,000 |
77,172 |
81,104 |
87,342 |
10 |
1,20,000 |
2,01,458 |
2,24,036 |
2,63,018 |
15 |
1,80,000 |
4,01,621 |
4,75,931 |
6,16,366 |
20 |
2,40,000 |
7,23,987 |
9,19,857 |
13,27,073 |
25 |
3,00,000 |
12,43,160 |
17,02,207 |
27,56,561 |
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