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(27-1-2015 LiveBombayStockExchange Investment tips series) - Systematic Investment Plan (SIP) is method for investing your money in Mutual Funds, It can be compared with Recurring deposits and the only difference is that a person investing in SIP can make losses. whereas a person investing in recurring deposit would gain a fixed interest for
the time period of investment, and Mutual funds companies invest money collected from SIP in stock markets, whereas recurring deposits are done with banks.
ROI in SIP varies from the type of SIP, ie if the Mutual funds in which SIP money is invested by asset management companies in Real Estate, or bank would give different ROI over a period of time.
There are numerous SIP companies working in Indian subcontinent but all are not profitable. SIP is a disciplined way for investing your money on weekly, monthly, quarterly or yearly basis. One can decide the minimum monthly installment, some SIP's start from as low as INR 1000 per month installment. One can choose the stocks in which he wants to invest money ie a person can choose large cap, midcap or small cap mutual funds. Investing in SIP is also very flexible where a person can increase his monthly installment as his need increases and income grows.
Different mutual funds have different locking period. Various mutual funds have a locking period of 2-3 years or more as your fund manager plans the money keeping 2-3 years time horizon in consideration. Choosing a Mutual fund is not that difficult as a person can check for CAGR (Compounded annualised growth rate) of a mutual fund which is published by Mutual funds investment companies from time to time.
From MF investment related posts:
MF investing basics, working
Calculating net asset value(NAV)
Types of Mutual funds
Mutual funds investing tips
How Mutual funds work
Companies offering Mutual funds investing
Average Out your MF investment: NAV value of a Mutual funds varies from time to time and it is important to average out your rupee investment. for eg - suppose the Mutual fund in which you have invested has NAV value of INR 9 in a month and hence that month you would get 1000/9 number of units. Next month NAV rises to INR 11, hence your investment of 1000 would give you 1000/11 units. If in next month NAV falls to INR 8 per unit then you get 1000/8 units hence your average unit price for period of 3 months comes to be 8.92 per unit. Had you invested INR 3000 in first month itself then you would have paid INR 9 per unit. Hence averaging out your investment is important.
Start early and relax: Compounding your investment is of great help, compounding helps getting more out of your invested money by just starting early. for eg imagine you invest INR 5000 per month at age of 30 years, till 60 years of age you would have invested 18 lac, but your investment would have risen to 61 lac when compunded at 7 perc per year. If you started investment 10 years later then at age of 60 you would have invested 12 lac but your investment would have become 26.2 lac at 60 years of age. which is less then half of what you get had you started 10 years early.
Along with above techniques for maximising your returns from SIP, there are various other advantages of SIP such as convinience, disciplined savings, long term savings and flexibility of exiting and taking money as you need it.
IF you like this post then kindly share it on facebook, like my facebook page - Stock Investing tips, press like button on top of this post, you can also subscribe to my blog and get all the investing tips directly in your mail box.
the time period of investment, and Mutual funds companies invest money collected from SIP in stock markets, whereas recurring deposits are done with banks.
ROI in SIP varies from the type of SIP, ie if the Mutual funds in which SIP money is invested by asset management companies in Real Estate, or bank would give different ROI over a period of time.
There are numerous SIP companies working in Indian subcontinent but all are not profitable. SIP is a disciplined way for investing your money on weekly, monthly, quarterly or yearly basis. One can decide the minimum monthly installment, some SIP's start from as low as INR 1000 per month installment. One can choose the stocks in which he wants to invest money ie a person can choose large cap, midcap or small cap mutual funds. Investing in SIP is also very flexible where a person can increase his monthly installment as his need increases and income grows.
Different mutual funds have different locking period. Various mutual funds have a locking period of 2-3 years or more as your fund manager plans the money keeping 2-3 years time horizon in consideration. Choosing a Mutual fund is not that difficult as a person can check for CAGR (Compounded annualised growth rate) of a mutual fund which is published by Mutual funds investment companies from time to time.
From MF investment related posts:
MF investing basics, working
Calculating net asset value(NAV)
Types of Mutual funds
Mutual funds investing tips
How Mutual funds work
Companies offering Mutual funds investing
Average Out your MF investment: NAV value of a Mutual funds varies from time to time and it is important to average out your rupee investment. for eg - suppose the Mutual fund in which you have invested has NAV value of INR 9 in a month and hence that month you would get 1000/9 number of units. Next month NAV rises to INR 11, hence your investment of 1000 would give you 1000/11 units. If in next month NAV falls to INR 8 per unit then you get 1000/8 units hence your average unit price for period of 3 months comes to be 8.92 per unit. Had you invested INR 3000 in first month itself then you would have paid INR 9 per unit. Hence averaging out your investment is important.
Start early and relax: Compounding your investment is of great help, compounding helps getting more out of your invested money by just starting early. for eg imagine you invest INR 5000 per month at age of 30 years, till 60 years of age you would have invested 18 lac, but your investment would have risen to 61 lac when compunded at 7 perc per year. If you started investment 10 years later then at age of 60 you would have invested 12 lac but your investment would have become 26.2 lac at 60 years of age. which is less then half of what you get had you started 10 years early.
Along with above techniques for maximising your returns from SIP, there are various other advantages of SIP such as convinience, disciplined savings, long term savings and flexibility of exiting and taking money as you need it.
IF you like this post then kindly share it on facebook, like my facebook page - Stock Investing tips, press like button on top of this post, you can also subscribe to my blog and get all the investing tips directly in your mail box.
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