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Sips and long term investing

Sips and long term investing

abhinavchauduary
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Sips and long term investing

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  1. Systematic Investment Plans (SIPs) – Averaging out Markets and Long Term Returns

  2. Systematic Investment Plans (SIPs) SIP is a long term investment method that involves investing a fixed sum of money at fixed periods of time (Monthly/ Quarterly) in Mutual Funds Scheme at the prevailing Net Asset Value. (NAV) • Why invest in SIPs? • Builds Investment Discipline : Creates a habit of regular savings • Affordable & Convenient : Allows for early investments in small amounts • Helps in compounding your wealth • Safegurads against market volatality through Rupee Cost Averaging • Safeguards against inflation as long term returns from equity is generally higher than average inflation rate

  3. The Power of Compounding & Rupee Cost Averaging • Illustration 1: • Rs 1,000 invested every month for 30 years would make your investment at Rs.3,60,000. • This amount may not be available with you one time but can be invested through small amounts over a period of time. Small amounts invested regularly can grow into a substantial lumpsum. • This illustration shows how the Power of Compounding and Rupee Cost Averaging helps an amount of Rs.3.6 Lacs invested in small amounts over a longer period of time, grow to Rs 62 lacs and Rs 23 Lacs depending on the annual rate of return of 15% and 10% respectively.

  4. Power of Compounding – Benefits of Starting Early If you were to invest Rs. 5,000 per month. The table shows returns generated at different rates when invested at different times in your life. We have assumed that the investment matures at the age of 60 years. Indicative rates of return of 14% & 12% have been taken for calculation of returns

  5. Rupee Cost Averaging – the Advantage • ** • The purchase of Mutual Fund units at regular intervals ensures the averaging out of your investment. • Regular investments also safeguards against the volatality prevailing in the markets at that point of time • Rupee Cost Averaging reduces the average Cost of Purcahse to Rs. 9.98 per unit. • * The illustrations given are indicative and should not be construed as investment advice

  6. Conclusion • SIPs follow the principle of Averageing your purchase and Compounding of Returns • SIPs are longer term investments and have a tendency of giving positive returns over a longer period of time • SIPs focus on consistent and continous investments – Fixed amount for fixed period of time to safeguard from market volatality • SIPs Impart discipline in investing – most needed quality for a long term wealth creation • SIPs are simple & quick – Hassle free investments with one time instruction • Law of Averaging at work – Rupee Cost Averaging at its best • SIPs make investing more affordable

  7. Email : Servicedesk@finedge.in Phone: 011-45072800

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