SIP-Matters
Small Investment Plan, Simple Investment Plan, Superb Investment Plan, Serious Investment Plan, Strategic Investment Plan, Sensitive Investment Plan, Staggered Investment Plan, Superlative Investment Plan…
You may call SIP in various names but whatever way you call, ultimately SIP does the magic for you.
Actually in SIP is Systematic Approach and Automatic Growth
For Salaried person SIP is major key area : if we go by thumb rule then investors should put 1/3rd of their income in savings/investment ( can invest through SIP). 1/3rd for house hold day to day expenditure and rest to be used as a swing factor/s – enjoy, save or Invest.
It depends, the MAXIMUM you can save/invest in your early years with keeping your level of enjoyment, comfort, satisfaction and balance of LIFE, the more confident you will be in your later years especially when you are reaching 55-60+ years.
For lower or middle income group SIP planning is most important. In case they fail to plan early, they may suffer a miserable loss after 20 years. Therefore, rather than repenting later, start “SIP’ today. Also, try to make few good changes in financial habits like:
…not indulge in impulsive purchase
…Step up my savings /investments in every year
…pay off personal loans and credit card dues asap
…not to take a new loan to meet expenses
…not keep idle money in bank accounts
Power of Compounding in SIP – 8th wonder of the world – how it works
SIP Returns, Illustration of Rs.10000/- p.m.
| SIP Returns of Benchmarks Indices as of 7th Apr 2019 | ||||||||
| Monthly SIP investment amount – Rs.10,000/- | ||||||||
| Period | 5 Years | 7 Years | 10 Years | 15 Years | ||||
| Invested Amount | 600,000 | 840,000 | 1,200,000 | 1,800,000 | ||||
| Performance | Value on 07/4/2019 | Yield (%) | Value on 07/4/2019 | Yield (%) | Value on 07/4/2019 | Yield (%) | Value on 07/4/2019 | Yield (%) |
| Nifty Financial Services | 917,996 | 20.41 | 1,576,883 | 18.01 | 2,763,384 | 16.12 | 7,236,474 | 16.96 |
| Nifty MNC | 756,146 | 6.50 | 1,325,514 | 13.06 | 2,383,441 | 13.33 | 5,620,864 | 14.04 |
| Nifty India Consumption | 748,099 | 6.76 | 1,259,659 | 11.60 | 2,295,493 | 12.62 | #N/A | #N/A |
| Nifty 50 | 781,315 | 12.67 | 1,266,824 | 11.76 | 2,081,586 | 10.76 | 4,496,632 | 11.42 |
| S&P BSE 100 | 775,993 | 11.63 | 1,268,474 | 11.80 | 2,082,625 | 10.77 | 4,530,961 | 11.51 |
| S&P BSE 200 | 776,719 | 10.99 | 1,285,544 | 12.18 | 2,118,489 | 11.09 | 4,575,313 | 11.63 |
| NIFTY Large Midcap 250 | 783,588 | 9.48 | 1,358,862 | 13.76 | 2,288,365 | 12.56 | 4,190,270 | 12.12 |
| CRISIL Short Term Debt Hybrid 60+40 Fund Index | 759,747 | 9.52 | 1,213,779 | 10.54 | 2,020,971 | 10.19 | 4,121,020 | 10.39 |
| Nifty Midcap 150 | 786,546 | 7.19 | 1,440,660 | 15.43 | 2,484,589 | 14.11 | 4,587,494 | 13.26 |
| Nifty Dividend Opportunities 50 | 731,778 | 8.18 | 1,139,682 | 8.75 | 1,901,373 | 9.02 | #N/A | #N/A |
| Nifty Infrastructure | 628,027 | 1.96 | 954,937 | 3.69 | 1,325,095 | 1.98 | 2,242,046 | 2.88 |
| S&P BSE HC | 583,831 | (1.34) | 994,453 | 4.85 | 1,970,937 | 9.71 | 4,675,128 | 11.88 |
SIP is now more of a Accumulation Plan and Power of Compounding rather than Risk Averaging/Rupee Cost Averaging. When you have single income source i.e. salary and do not have no second earning option, then to boost your savings SIP in diversified equity mutual fund is best option.
Asset allocation in SIP:
Asset allocation varies person to person, depending upon risk capacity, goal, duration of investment, thought process etc. First step in asset allocation is to understand your investor profile with returns expectations, objectives, time horizon, taxes etc. and then split your investment in the different types of funds to get right balance. You can also take help from a professional financial planner to understand what are the available options for tax efficient better returns in long term.
SIP works better with diversified equity/ diversified fund. In case you have chosen sector specific /thematic fund, Time IN and Time Out is extremely important. But it is better to avoid sector funds in SIP.
Actually, SIP investor – “NEVER COUNT DAYS” -but he makes the days count. Ideally for salaried person it should be [(Income- SIP ) = Expenditure]
Some FAQs about SIP :
Question: Can I stopped my SIP when equity markets are continuously going down ?
Answer: No. It’s better to continue with your SIP as you get more units at low price and down side is nothing but the temporary negative sentiment in equity market. Choose diversified funds with a longer track record.
Question: We are (DINKS) – Double Income with no Kids – we can easily manage. Do we need SIP?
Answer : Yes. This is actually best time to save and invest, whatever maximum amount saved at this time will add boost in the future accumulation. This is the best time to start SIP.
Generally our Income rises in A.P. i.e. Arithmetical Progression. Whereas our expenditure expands in G.P. means Geometric Progression, in addition with Inflation and lifestyle inflation.
Start SIP early by managing your expenses and understand which are real assets/liabilities. Do not forget to review your SIP investments semi annually/annually & rebalance whenever requires.
Share your knowledge with friends and relatives for more successful enjoyment. Actually SIP matters – Really A Lot…
