SIP is best investment tool for long term planning….

SIP is best investment tool for long term planning….

SIP (Systematic Investment Plan), is a method of investing a fixed sum, regularly in a mutual fund scheme. It is like a Recurring deposit (RD) used in Banks and post office with some better features.
It’s an ideal way for the first time investors to enter capital markets with an aspiration to create wealth. Most of us work very hard to earn money but very few ensure that our money will work as hard as us to create wealth for us. Sip is a simple, safe and plug in play model for first time investor to create wealth as low as Rs 100 per month.

Why Sip:
 It inculcates Savings Habit.
 Protects against market volatility.
 Eliminates need for timing market.
 Helps rupee cost averaging.
 Create long term wealth.

SIP is a disciplined way to save small amount month on month to create long term wealth. Drop by drop we can save a lot, a lit bit of conscious effort by investor saving prudently month on month can add a lot in long term.
A mere Rs.10000 saving month on month can save Rs 12 lakh in 10 years. So it inculcates savings habit in investor to make this small effort big in long run.

As we know markets are volatile by nature. So SIP gives an investor a great way to buy constantly and tide over the volatility. Normally, we have seen people saying that market is high now and we should wait or buy later or book some profits from investment. But nobody knows the next low level of market so it is impossible to time the market. Rather timing investor should follow simple strategy of investing through SIP which inculcates discipline and constant buying of units which give rupee cost averaging also.

An Example of two friends’ i.e Rohit and Manoj.
Rohit always try to time the market and has been investing Rs. 10,000 per month for last 15 years. He always buys at Market lows (which is impossible) and generates a return of 15.65% p.a.
Manoj who does not care about market level and has been investing constantly at same period is able to generate return of 13.70% p.a.
So, the difference Rohit’s and Manoj return is mere 1.95%. It means Rohit’s strategy which is next to impossible to time low of market every month generates alpha to Manoj’s consistent approach is negligible.

Sip is a best tool to create long term wealth which is shown in graph

This graph shows that if an investor invested Rs 1000 p.m for 30 years, he would have invested 3.6 lac over the tenure.
But the maturity value varies at the rate of 10%, 15 % and 19.43% p.a. i.e 22.79 lac , 70 lac or 2.09cr respectively. It means as low as Rs 1000 can make an investor wealthy over long term.
We all have various dreams that we want to realize – owning a Car, a House or going on a Vacation. Besides these, we also need to plan for Children’s Education, their Marriage and our Retirement.
Achieving these dreams may seem like climbing Mt Everest, but it’s possible if you prepare for it – Step by Step.
Start you SIP now or increase your contribution after different life stages. The time you spent without SIP is loss of your money.

INVEST MART