Systematic Investment Plan

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Life is a long journey.
Financial
independence can make
it a pleasant one.

Take small steps towards a better financial future.

Systematic Investment Plan

A simple & effective strategy for long term wealth creation.

We work hard to earn money, but often don't pay enough attention to whether that money is working hard enough to help us realize our dreams. When it comes to investing , many tend to think along the following lines

I'm too busy making money, to worry about investing and managing it.

I don't have the time or expertise to follow stock market movements and make investments at the right time

I don't have enough surplus cash to invest

I'm looking for an investment avenue that is simple, convenient and effective.

If your thinking is similar, "Systematic Investment Plan" is ideal for you. It is an investment program that allows you to contribute a fixed amount ( as low as Rs.500) in mutual funds at regular intervals. Acknowledged world wide as one of the best ways to accumulate wealth over the long term - systematic investing can help you achieve your financial goals. Read on to find out more about this powerful and disciplined savings program...

What is a Systematic Investment Plan?

Systematic Investment Plan (SIP) is a disciplined way of investing, where you invest fixed amounts at a regular frequency and this time-tested approach helps bring in the much-needed investment discipline, and has shown good results the world over. This strategy can be used in combination with your lump sum investment or in isolation.

Why SIP?

In addition to getting you into the habit of saving regularly, SIP puts two powerful forces to work for you:- Rupee Cost Averaging & Power Of Compounding

Rupee Cost Averaging

Total Rs.5000 Rs.50 508.333

The average NAV = 50/5 = Rs.10.00

Your average price = Your total investment / Total no.of units = 5000/508.333= Rs. 9.84

What you see from the table above is the fascinating aspect of Rupee Cost Averaging. It makes you buy fewer units when the price is high and more units when the price is low, thereby bringing down your average cost, giving you the same discipline as investment professionals. While Rupee Cost Averaging does not assure you of a profit, it is known to have worked well for millions of investors throughout the world.

The power of Compounding

The longer the period of your investment, the more you accumulate, because of the power of compounding... which is why it makes sense to start investing early.

Why Equity?

India is expected to sustain its place as one of the fastest growing economies in the world. However, a rapidly growing economy also means that the prices of goods and services that you utilise on a daily basis would also rise ( increasing inflation), leaving lower amount for your savings & investments.

Inflation is one of the main threats to your savings, as it erodes the purchasing power of your future income. i.e., in 'real' terms the purchasing power of your money declines over time. For example, if your current living expenses are Rs.20,000 per month, the following table provides you the implications of various inflation rates-

Simply put, this means that you have to look beyond traditional savings avenues towards those investments with the potential to deliver inflation-beating returns over the medium to long term.

Historically, equities are acknowledged to have the potential to deliver superior returns over a medium to long term frame. Moreover, Indian companies are expected to benefit from the growing demand due to the rapid economic growth in India and rising exports, which will reflect in their stock prices. SIP can help you capitalize on the ups and downs of the equity market - when the markets are low , you buy more and when the markets rise, you buy less. This discipline investment approach has proven to be a successful way of building wealth for millions of investors all over the world.

Summing up, you need to plan well for your future financial needs taking into consideration various factors. Once that's done, a Systematic Investment Plan can help bring in a discipline to your savings program and steer you towards your goals. Franklin Templeton offers a range of funds in which you can start investing systematically with a SIP.

Invest now for a worry-free future !!
For more information on Systematic Investment Plan,
please contact us for free Financial Planning advice.