How long should be the duration of SIP?

[anandsharma]

Hello,

I want to start a SIP in an equity diversified MF with a long term objective. icicidirect.com gives an option to select the period up to 300 months (25 years). However, I feel that is too long (or am I wrong?)

Could anyone let me know how much should be the ideal duration for SIP in an equity diversified fund with growth option?

 

[anandsharma]

Any one? Any suggestion?

 

[bkumar]

I feel you should keep SIP on till you reach to a point where you need to withdraw funds and do not have financial capability to continue the SIP. Take an instance if your money grows at 10 to 15 % compounding annually (which is fair estimate) and your SIP amount is around 10000 monthly then your corpus will grow to in excess of 1 crore in 20 years time. Consistency is important as more is market crash better would be growth in fund value in long term. As history goes, markets go up and down it can not remain foreever low or forever high... cheers.

 

[anandsharma]

Hello bkumar,

Thank you very much for your valuable reply.

 

[cinelsoy]

Dear friends,
I need a clarification regarding SIP. Currently I am doing SIP in 6 funds each Rs. 1000/month. From 01s Aug, the fund houses would charge Rs. 30 as fee upto 10000 Rs.
Previously it was 2.25%. So for Rs. 1000 one will pay Rs. 22.5 as fee. Now it is increased to Rs. 30. My question is, will it be profitable if I close 4 out of 6 funds and continue with 2 funds (one multi-cap and another blue chip) with Rs. 3000 each / month instead of 6 funds each Rs. 1000 / month?

 

[bkumar]

on this let me tell you when you look at long term then this difference of 7.5 Rs. is nothing even if you close I dont see any sizeable gain. What is important that look at the quality of fund. after three years take stock of situation among these six funds selcet three best in terms of return and move out from bottom three funds and join the three best chosen by yourself. This way you will have at least three years track record of all the six funds and it will be vital in taking decision. My suggestion wud be remain invested with at least one midcap fund and two diversified funds. This way you will have scope of higher returns (ofcourse risk will increase too). But if your target is long term then I think you will overcome most of the risk. But keep taking stock of situation every three years. Start withdrawing from funds at least one to two year before you need the money, and transfer this money into safe instruments like banks, post office etc.

 

[cinelsoy]

:thumb:Thank you Mr.Kumar. I got your message. I have decided to stick on all the funds for some more time and will not bother about small amount like 7.5 rupees.
I have the following funds:
1. FT Prima fund (G)
2. ICICI Discovery (G)
3. HDFC Capital builder (G)
4. Reliance Vision (G)
5. SBI Magnum multicap (G)
6. SBI Magnum Bluechip (G)

All of them started in 2006. All are nearing break-even only.

 

[rajeshn2007]

SIPs could be done for 5-10 years , review the fund performance every 3 yrs.
Stick with large cap equity funds. maybe 10% could be put in midcap fund.

 

[anandsharma]

Thank you rajeshn2007