SIP
Systematic Investment Plan
(Simplest Solution to Wealth Creation)
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FINANCIAL PLANNING FOR THE FUTURE
Income
Phase I
Phase II
Phase III
Children’s Marriage
Child Education
Do You Want To
Compromise On Your
Living Standard After
Your Retirement ?
Housing
Children
Marriage
22 yrs
38 yrs
Birth & Education
Earning Years
22 yrs
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Retirement
60 yrs
Age
Savings of Rs 100000 will minify year after year,
due to ….
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MEANS TO ACHIEVE GOALS
A SIMPLE SOLUTION TO WEALTH CREATION
INVEST EARLY
+
INVEST REGULARLY (DISCIPLINED SAVINGS)
+
INVEST CORRECTLY (RIGHT ASSET CLASS )
=
WEALTH CREATION
“SUCCESS COMES SIMPLY BY DOING SIMPLE THINGS…”
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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 SYNOPSIS
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 Free
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BENEFITS OF EARLY INVESTING
JAMES
BOND
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
200000000
150000000
100000000
50000000
24
Amount after 30 years
186984169
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20
68933513
15
20769838
6
3013545
• 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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POWER OF COMPOUNDING
 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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Rohit begins investing
at 35 a similar amount
of Rs.10000 annually.
He invests for the next
25 years and he too does
not withdraw any money.
25 year old Preeti invests
Rs.10000 annually for
10 years and stops. She
does not withdraw any money.
1.01crore
24.6 lacs
76.9
lacs
24.6lacs
25
30
35
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40
45
50
55
60
RUPEE COST AVERAGING
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.
Graphical Presentation
Thank You
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HASSLE FREE
• 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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EXAMPLE OF LUMPSUM vs. SIP
Rs.80000 invested in lumpsum at inception in Pru ICICI
Tech vs. Rs.1000 invested every month
(for 82 months) since inception
280000
247329
240000
200000
160000
107172
120000
80000
40000
Lumpsum Invstt
Sip Invstt
Performance of lump sum investment depends on the price at which they are
bought
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Nov-06
Jul-06
Mar-06
Nov-05
Jul-05
Mar-05
Nov-04
Jul-04
Mar-04
Nov-03
Jul-03
Mar-03
Nov-02
Jul-02
Mar-02
Nov-01
Jul-01
Mar-01
Nov-00
Jul-00
Mar-00
0
SIP Investors beat equity MF peers in returns race
• 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 2528% (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
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Thank you
Happy Investing
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