Systematic Investment Plan

[MFadvisor]

You can park your fund in good Debt or Liquid fund and Transfer money from that to an Equity Diversified Fund (STP)

MFAdvisor
jain_daksh@yahoo.com

[singampuli]

thanks for your answers.
I have invested in magnum and i got the first statement.
In that statement they have mentioned NAV as 52.3725 in the units calculation area.
But NAV on 14 sep 2007 is 51.2200
what calculation makes NAV as 52.3725?

[Vicky78]

Nav is the weighted average of the stocks in the portfolio normalized to the previous day close value.

say when the fund start it has face value of 10 and say it hass 2 stocks

Ril - Rs 1000 10 shares
Infy Rs 1000 5 shares

weight of RIL - (10*1000)/((10*1000) + (5*1000)) = 0.67
weight of Infy - 0.33

now if RIL goes up by 10% & Infy goes down by 10%
nav gain = 10%*0.67 + (-10%)*0.33 = 3.4%

So new Nav = 10+(10*3.4/100) = Rs 10.34

[Vineet_Nayar]

Hi Singampuli ,

Value of units purchase is always higher as 2.25% is the entry load which you have to pay in all schemes on the funds.....

So I hope you understand now why your purchase price was higher than the NAV on tht day, you can calculate 2.25% of the NAV and then add it to the NAV of tht day.....you will get it....

[singampuli]

thanks vicky and vinnet.
now i understood.

[Andy143]

if you are a long term investor, then investing in a SIP or lumpsum does not make much difference.. Infact opinions tend to tilt towards lumpsum investment. The FII money that is seen pouring in is a long term phenomenon.. The interruptions and pull back we have seen are just passing clouds..

[Sanjum]

Investment in SIP may not always be beneficial.
It may be beneficial if the NAV of the fund remains lower than the value when you first purchased it for some earlier or middle months of investment and then pick up its momentum till the time you redeem it. May the attached file be beneficial for u to understand the scenerio.

However, remember that SIP is meant for those who may not like/able to take the investment load of a heavy lumpsum amount at one go or for those who may not like to bother much about the market ups and downs and wants somewhat handsome return after a long term investment(may it be 4 to 10 yrs).

But one point is clear in case of SIP is that it builds the habit of regular savings into one's mind.

[Vicky78]

SIP averages the cost over a period of time. Though this partially eats away the profits in a bull run, the benefit of cost averaging would be apparent when there is a bear run.

For example a person had invested lumpsome in an ELSS in Jan 2000 (at the peak of the dot com boom). 3 years later his returns were -5%. Had he averaged the cost the gains would have been better. Although SIP eats away part of the profits during the bull run, I believe it is a small premium to pay given the inherent inconsistencies in the stock market.

Equities do require a long term commitment 5-10 years

[all4excel]

I want to know whether going Monthly SIP or Quarterly SIP is better.

Or Investing lumpsum is better?.

Is it better to invest in TAX saving funds lumpsum or in SIPS?

Kindly explain with suitable examples..

Thanx

[surfingminds]

SIP don't put stress on us to wait for bottom of market but invest chuck of money based on time. So it can work out to be advantage or if it gets invested on peak timings of market it can be disadvantage but i think the fund manager is smart enough to do at proper times.

I prefer personally balanced approach i.e SIP and lumpsum investment based on my take on market behaviour.
Qtly SIP is good as it gives time to select your funds or review the exisiting fund.