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Dear All,

 

  

 Don't Stop Investments --  Makes market timing irrelevant  :::::::  Most investors are not experts on stocks and are even more out-of-sorts with stock market oscillations. With an SIP investment, disciplined investing over the long term sees to it that an investor is not guided by the market-timing strategy.  Systematic investing in a mutual fund is the answer to preventing the pitfalls of equity investment and still enjoying the high returns. SIP allows you to take part in the stock market without trying to second-guess its movements. It  can go a way in minimizing the effects of investing in volatile markets. Secondly to prevent losses in  volatile   markets.                                

                                                              OR

 

Lowers the average cost  :::::  SIPs work better because of rupee-cost averaging. Under rupee-cost averaging an investor typically buys more mutual fund units when prices are low. On the other hand, he will buy fewer mutual fund units when prices are high. This results in averaging of cost per unit and hence enhances the profit you would realise on selling the units . This is a good discipline since it forces the investor to commit cash at market lows, when other investors around him are wary and exiting the market. Investors may even be pleased when prices fall because the fixed rupee investment would now fetch more units.

                                                               OR

SIP is one of the best investment option while investing in equity segment. Rupee cost averaging will be worked out in SIP and you will get good returns over a long period. Money will be safe in fluctuations of the stock market. If you targeting for a long term SIP is a very good option. You will be purchase units in different rates of the unit depending on the stock market.                    

                                                              OR

 

In SIP we are investing a fixed amount regularly. Therefore, we end up buying more number of units when the markets are down and NAV is low and less number of units when the markets are up and the NAV is high. Generally, we would stay away from buying when the markets are down. We generally tend to invest when the markets are rising. SIP works as a good discipline as it forces us to buy even when the markets are low, which actually is the best time to buy .

 

SYSTEMATIC INVESTMENT PLAN (SIP)  

 

Mutual Fund  SIP is similar to a Recurring Deposit . Every month on a specified date an amount you choose is invested in a mutual fund scheme of your choice. The dates currently available for SIPs are the 1st, 5th, 10th, 15th, 20th and the 25th of a month. You?ll be amazed to learn about the many benefits of investing through BAFDL in any Mutual Fund product through SIP. 

 

Note ::  Now  Daily  SIP is  also  avaliable with the minimum of  Investments of Rs. 300.00 . If you are opting Daily SIP -- You are going to get best averaging. Till date no other option is available which is better than this option in India. 

 

 

 

 

Benefit 1 ::::::   Become A Disciplined Invester


Being disciplined - It?s the key to investing success. With the Systematic Investment Plan you commit an amount of your choice (minimum of Rs. 1000 and in multiples of Rs. 100 thereof*) to be invested every month in one of our schemes.

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. It?s as simple as giving at least 6 postdated monthly cheques to us for a fixed amount in a scheme of your choice. It?s the perfect solution for irregular investors.
*Minimum amounts may differ for each Scheme. Please refer to SIP Enrolment Form for details.

Benefit 2   ::::::::: Reach Your Financial Goal


Imagine you want to buy a car a year from now, but you don?t know where the down-payment will come from. Mutual Fund SIP is a perfect tool for people who have a specific, future financial requirement. By investing an amount of your choice every month, you can plan for and meet financial goals, like funds for a child?s education, a marriage in the family or a comfortable postretirement life. The table below illustrates how a little every month can go a long way.

Monthly Savings - What your savings may generate

Savings per month
(for 15 years)

Total amount invested
(Rs. in Lacs)

Rate of return

6.0%

8.0%

10.0%

(rupees in lacs, 15 years later)*

5000

9.0

14.6

17.4

20.9

4000

7.2

11.7

13.9

16.7

3000

5.4

8.8

10.4

12.5

2000

3.6

5.8

7.0

8.3

1000

1.8

2.9

3.5

4.2


*Monthly instalments, compounded monthly, for a 15-year period.

Disclaimer: The illustration above is merely indicative in nature and should not be construed as investment advice. It does not in any manner imply or suggest performance of any  Mutual Fund Scheme(s). Please read Risk Factors.

Benefit 3  ::::::  Take Advantage of Rupee Cost Averaging


Most investors want to buy stocks when the prices are low and sell them when prices are high. But timing the market is timeconsuming and risky. A more successful investment strategy is to adopt the method called Rupee Cost Averaging. To illustrate this we?ll compare investing the identical amounts through a SIP and in one lump sum.

Imagine Suresh invests Rs. 1000 every month in an equity mutual fund scheme starting in January. His friend, Rajesh, invests Rs. 12000 in one lump sum in the same scheme. The following table illustrate how their respective investments would have performed from Jan to Dec:

 

 

Suresh?s Investment

Rajesh?s Investment

Month

NAV

Amount

Units

Amount

Units

Jan-04

9.345

1000

107.0091

12000

1284.1091

Feb-04

9.399

1000

106.3943

 

 

Mar-04

8.123

1000

123.1072

 

 

Apr-04

8.750

1000

114.2857

 

 

May-04

8.012

1000

124.8128

 

 

Jun-04

8.925

1000

112.0448

 

 

Jul-04

9.102

1000

109.8660

 

 

Aug-04

8.310

1000

120.3369

 

 

Sep-04

7.568

1000

132.1353

 

 

Oct-04

6.462

1000

154.7509

 

 

Nov-04

6.931

1000

144.2793

 

 

Dec-04

7.600

1000

131.5789

 

 


*NAV as on the 10th every month. These are assumed NAVs in a volatile market

Disclaimer: The illustration above is merely indicative in nature and should not be construed as investment advice. It does not in any manner imply or suggest performance of any Mutual Fund Scheme(s). Rupee Cost Averaging neither ensures you profits nor protects you from making a loss in declining markets. Pleaseread Risk Factors.

As seen in the table, 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.


At the end of the 12 months, Suresh has more units than Rajesh, even though they invested the same amount. That?s because the average cost of Suresh?s units is much lower than that of Rajesh. Rajesh made only one investment and that too when the per-unit price was high.

Suresh?s average unit price = 12000/1480.6012 = Rs. 8.105
Rajesh?s average unit price = Rs. 9.345

 

Benefit 4  ::::::::  Grow Your Investment With Compounded Benefits


It is far better to invest a small amount of money regularly, rather than save up to make one large investment. This is because while you are saving the lump sum, your savings may not earn much interest.

With 
 Mutual Fund SIP, each amount you invest grows through compounding benefits as well. That is, the interest earned on your investment also earns interest. The following example illustrates this.

Imagine Neha is 20 years old when she starts working. Every month she saves and invests Rs. 5,000 till she is 25 years old. The total investment made by her over 5 years is Rs. 3 lakhs.Arjun also starts working when he is 20 years old. But he doesn?t invest monthly. He gets a large bonus of Rs. 3 lakhs at 25 and decides to invest the entire amount.

Both of them decide not to withdraw these investments till they turn 50. At 50, Neha?s Investments have grown to Rs. 46,68,273* whereas Arjun?s investments have grown to Rs. 36,17,084*.. Neha?s small contributions to a SIP and her decision to start investing earlier than Arjun have made her wealthier by over Rs. 10 lakhs.

*Figures based on 10% p.a. interest compounded monthly.

Disclaimer: The illustration above is merely indicative in nature and should not be construed as investment advice.. It does not in any manner imply or suggest performance of any Mutual Fund Scheme(s). Please read Risk Factors.

Benefit 5  :::::::  Do All This Effortlessly


Investing with  Mutual Fund SIP is easy. Simply give us post-dated cheques or opt for an Auto Debit from you bank account for an amount of your choice (minimum of Rs.  300/500/1000 and in multiples of Rs. 100 thereof*) and we?ll invest the money every month in a fund of your choice. The plans are completely flexible. You can invest for a minimum of six months, or for as long as you want. You can also decide to invest quarterly and will need to invest for a minimum of two quarters.

All you have to do after that is sit back and watch your investments accumulate.
Please refer to the SIP Enrolment Form for terms and conditions before enrolment.
*Minimum amounts may differ for each Scheme. 
 

 

 

Criteria For Equity Fund Selection should be 

**  It should be diversified  equity Fund.

**   It should be large Cap Fund.

Ø      **  Funds having performance track record with Consistent AUM.  

**  Major Fund Investment should be in Blue Chip Stock

Ø      ** Criteria is low/medium risk with high Return

Ø      ** The AUM should be having minimum 4 star ICRA ranking  

  

 




Category Shares & Stock, Other Articles by - Indraneel Sen Gupta 



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