Systematic Investment Plan

Dear all

SIP is not a product, its a method of investment, you can never claim sip is better over lump sum. Systematic investment plan is for someone who does not have a large sum with him and wishes to invest every month out of his earning. Now for him, instead of timing the market and investing for every 2 or 3 months its wise to start a monthly sip via ecs and sit back. By doing so every month a fixed amount automatically goes and it averages rupee cost averaging over a period of time. Lump sum is for someone who has a few lakhs in hand and wishes to invest. If his out look is long term he should invest in the market as a lump sum. He should not choose sip here, for it will take a very long time to be fully invested and by the time he would be fully invested he would have spent a few years also if the sum is big. That's not a wise decision. Hence my advice is for a regular savers go thro the sip route and those who have lump sum and long term outlook, go for lump sum investments( if you feel the market is highly prices you could go thro the stp route. my email id : [email protected]
DAVID SOLOMON, AMFI CERTIFIED MUTUAL FUND ADVISOR
 
Dear all

SIP is not a product, its a method of investment, you can never claim sip is better over lump sum. Systematic investment plan is for someone who does not have a large sum with him and wishes to invest every month out of his earning. Now for him, instead of timing the market and investing for every 2 or 3 months its wise to start a monthly sip via ecs and sit back. By doing so every month a fixed amount automatically goes and it averages rupee cost averaging over a period of time. Lump sum is for someone who has a few lakhs in hand and wishes to invest. If his out look is long term he should invest in the market as a lump sum. He should not choose sip here, for it will take a very long time to be fully invested and by the time he would be fully invested he would have spent a few years also if the sum is big. That's not a wise decision. Hence my advice is for a regular savers go thro the sip route and those who have lump sum and long term outlook, go for lump sum investments( if you feel the market is highly prices you could go thro the stp route. my email id : [email protected]
DAVID SOLOMON, AMFI CERTIFIED MUTUAL FUND ADVISOR
I don't think its as black and white as stated above. If an investor knows its a bear market or is unsure of his investment strategies, an investor can invest in debt funds and do a cautious STP into more aggressive funds.

On the flip side, even when an investor is invested but knows the general trend in downward (the investor has to be a real learned one to know this), he/she can STP from equity funds to debt. Of course this has to be a very informed move but all of the above is quite possible.

My $0.02
 

travi

Well-Known Member
In SIP plans, should the plan portfolio (holdings) be given greater importance compared to returns?
thanks
Doesn't really matter at retail level.
Just make sure that the Fund House has a good history and fund manager/fund itself has had consistent returns.
Also check their performance in bear markets.
 
SIP is also a very good Investment plan, The SIP portfolio is designed in such a way as to bring in different sectors representing diversification. Investors have just to buy the stocks in portfolio periodically at regular intervals, say monthly or weekly. Over a period the invested portfolio will become large enough to meet your financial commitments. To give the privilege of choice to investors, two portfolios are given and they can select between them according to their risk profile. Time to time, stocks in the portfolio will be reviewed and suitable updating will be done, if needed.
 
Some other benefits of SIP accounts are-
Offers small investors a direct entry to the stock markets, with the benefit of investing in stocks selected by our expert research team.
Investment can be made in small amounts monthly, which is best suited for the salaried class
investments are made in all market conditions. The general psychology of investors is to invest when the market is on bull trend. But SIP encourages an investor to set aside sentiments and make him/her disciplined, investing in down market conditions also.
Unlike in mutual fund sip, dividends from investments are directly credited to the investors bank account. I had my SIP and PMS handled by Capstocks, they are SEBI approved Stock brokers. I personally think SIP is much better than LIC's!!
 

aaru

Active Member
Do you guys have any idea where can I find a free software that calculates XIRR returns and not absolute returns for any mutual funds, for tracking.. For long term?
 
SIP is basically an investment strategy of Mutual Fund which one can invest same amount in particular fund periodically (it can be monthly, quarterly or annually).

Systematic Investment Plan [SIP] is most handsome instrument any financial institutions can provide with minimal risk + high return in long horizon wealth creation. It does not give you the guarantee returns like Banks provides, but it gives you minimum of 12% (equity fund) which is almost double than bank return (such as FD, RD). Sometimes it can give you more than 25%.

There are real benefits to invest in SIP:
  • Rupee Cost Averaging (It's a term which you can understand how least risk is as compared to lumpsum)
  • Tax Saving and Deduction (through ELSS Fund under section 80C)
  • Power of Compounding (The amount you've been investing can be multiplied easily during long term)
  • Disciplined Investing (you don't have to worry about how to save money when you start monthly SIP)
Short Example: Rs. 1,000 monthly in SIP for 30 years (Retirement plan) can create more than 1 crore (with assumed average CAGR return - 18%)
 

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