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Systematic Investment Plan (SIP)
Little Drops of Water Make the Mighty Ocean
Prepared By: Nildeep Patel
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What is a Mutual Fund ?
Diversified , professionally
managed portfolio of securities Your investments is pooled
along with others investments
Benefits derived as those of an
institutional investor
Risk diversification investing
in a pool of funds comprising of
50-60 stocks from various
sectors
Tax benefits
2. With FundManagers who
3. Invest in
securities which
generate
4. Returns , passed
back
to investor
1. Investors pooltheir money
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Systematic Investment Plan (SIP)
In a systematic investment plan, investor
invest a fixed amount regularly (Monthly orquarterly), generally in the stock or bond
market, through the investors chosen mutual
fund scheme.
Invest regularly and periodically instead ofLumpsum / 1 time investment.
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SIP
The two main characteristics of an SIP are
the
The power of compounding
The Smart Law of Averages
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Why Invest ?
Childrens education / marriage
Medical Emergency
Retirement
Aspirational goals House , Foreign Holiday
Other Obligations
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How does the SIP route help?
It adds discipline to your investment
it puts time on your side
Small amounts over a long term
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How to make Sip work for you ?
Set your financial goals
Identify the scheme Decide the SIP amount
Look for a long term commitment
Aim for the big picture Start investing.
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Systematic Investment Plan
Lets take an example
Anil is a businessman. He is married to Tina who is ahousewife. He has a son and daughter , both are in
school.
Over next couple of years, he desires to follow a
savings plan to build wealth for his childrens
education/marriage and buy a bigger house.
In order to hedge against uncertainties of business ,
he has been regularly investing in fixed income
instruments.
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Systematic Investment Plan
The lower interest rates over the years have been worrying him.
He decides to take the help of Sreeni , financial advisor. After carefully evaluating his financial goals and time required
to achieve his financial goals , he advises him to invest in
equity mutual funds for following reasons
Portfolio diversification
Superior returns
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Systematic Investment Plan
However, Anil is not comfortable investing into equity
mutual funds as they are volatile and therefore riskyand avoidable.
Sreeni advises Mahesh to register for Systematic
Investment Plan (SIP) and make use of volatility in
the market rather than get worried and avoid
investing in equity mutual funds.
Anil is not clear as to how SIP will work to his
advantage and requests for more details
Sreeni explains as follows :
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Systematic Investment, An
example
Rahul & Viru are two friends. Rahul decides to invest using SIP whereas Viru
decides to make lump sum investment.
.
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Systematic investing , An example
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Systematic Investing, An example
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Three common reasons for not
investing
I dont have enough money to invest
I am too busy making money to worry aboutmanaging it
I dont have the time or expertise to follow the market
movements and make investments at the right time.
SYSTEMATIC INVESTMENT PLAN
is the only answer to all reasons.
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Conclusion
Money is just like
Honey.
If it invested systematically.
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Thank You
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