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Systematic Investment Plan – The Simplest way to become CROREPATI  !!!!

Albert Einstein once noted that the most powerful force in the universe was the principle of compounding. In investing, this manifests itself through something called compound interest. You might have heard of the saying “Little drops of water fills the empty ocean“. Just like the small and little drops of water can fill the entire empty ocean in the long run, so do is the purpose of Systematic Investment Plan (SIP).

  • A systematic investment plan or SIP (as it is more commonly known) is a way to invest in mutual funds with small sums of money on regularly basis typically monthly or quarterly , over a longer period of time.
  • These small and regular investments will help in growth of your wealth in the long run and you will surely reap the benefits of the fruits that you have planted by doing systematic investments of your hard-earned money in mutual funds.
  • The idea of SIP is to set apart a sum every month or quarter, and use that to buy units of a particular mutual fund, regardless of its price. People like such a system because it helps them save regularly and build up an investment. These investments are done to achieve our future financial goals like buying a house, child’s education, child’s marriage, retirement planning etc.

As not all of us are born with a silver spoon in our mouth, each one of us still has a desire to be rich. We always want our hard-earned money to grow at a pace that not only fulfills our financial goals and needs but also helps us to improve our standard of living from good to better. Thus it is very much essential for all of us to do the proper systematic investment planning of our available financial resources in such a way that we can generate the maximum possible returns out of them with minimal risks.

For this, you can either plan investments by yourself, or consult an expert generally a financial adviser who helps in doing your investments wisely along with continuous monitoring of the performance of your portfolio so that you do not miss the best opportunities available in terms of investing and also do not take undue risk on your portfolio.

Systematic Investment Planing covers the entire gamut of financial plannings you would need to do in life like Child’s Marriage Planning, Retirement Planning, Child’s Education Planning etc

Benefits of SIP:

1-Rupee Cost Averaging: As units are bought at periodic intervals, their average cost of acquisition becomes much lower. Thus it enables greater profit. Made for all classes: An SIP can be started with as low as 100 rupees and hence it is attractive for all classes. Inculcates habit of investment: AN SIP inculcates a habit of investment and hence helps in procuring a large corpus over a long time.

2- Compounding effect: An SIP due to its compounding effect increases money by leaps and bounds over a long period of time. Great Retirement Planner: As it is a long horizon regular investment, it is a great retirement planner. Low charges: An SIP has very low charges and hence it is an attractive product. Easy Liquidity: Apart from close ended schemes, all schemes can be converted to cash easily and thus provides easy liquidity. SIP with insurance cover: Some companies like Reliance,LIC MF,Kotak MF,Birla MF provide SIP with insurance cover hence making it more attractive. In general SIP s are great tools for financial planning. It is an ideal tool for investors who have little knowledge of markets or have less time to invest in markets. SIP coupled with Term Insurance can prove to be a great combination. In this manner, the investor can gain from the equity market with very low charges and also secure the future of his family by the term cover. It is also advisable to start early as anyone who starts early gets the maximum benefits.

Realtime Example:

INR 10,000 invested monthly in Franklin India Prima Plus Fund (G) from 1st January,1999 to 1st January,2016 has become INR 1.71Crore


SIP Investment Returns (CAGR*): 21.91%*


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