Systematic Investment Plan (SIP)SimpleMin Investment of only Rs.500IntelligentBenefit from the Power of CompoundingPracticalLink to your Financial Goals
Did you know ?If your current monthly expenses areRs. 30,000/- p.m, after 20 years you willrequire Rs. 80,000/- p.m to maintain thesame lifestyleAssuming inflation rate of 5%
Did you know ?An education degree for your childwhich currently costs Rs. 10 lakh willcost Rs. 21 lakh after 15 years.Assuming inflation rate of 5%
Individual Investor Needs: Investment Goals• All individuals need to save for – Retirement – Child’s education / marriage – Medical emergency – Other family obligations Every individual has one or more of the above goals
Individual Investor: Life Stages Earnings Consumption Savings 22 27 40 60Young Independent Young Married Middle Age Retirement All individuals have a finite period to save for their investment goals
Value of Money over time Impact of inflation on monthly Value of Rs. 100,000 over time expenses of Rs. 30,000 today 100,000 79,599 78,353 62,368 48,102 38,288 37,68930,000Today 5 years 15 years 20 years Today 5 years 15 years 20 years At inflation of 5% Investors need to beat inflation
Performance of Various Asset Classes Cumulative annualised returns 1980-2004 15.6% 10.3% 8.9% 6.7% 5.7% 3.55% -1.1% Inflation Gold Bank FDs BSE Sensex Growth Real Growth Equities outperform other asset classes over the long term
Individual investors are scared of …..The Downside Risk in EquitiesThe Risk of Market VolatilityThe Risk of Market Timing
What else makes a material impact on investments in equity ?
Investing in the BSE Sensex – 25 years Returns are from 1981- Dec 2005 16.90% 16.02% 15.07% Fixed investment at Fixed investment at Fixed investment onhighest sensex value lowest sensex value 1st day of every month every year every year Market timing does not matter over the long term
The Power of Compounding Debt BSE Sensex BSE Sensex Instrument Scenario A Scenario B Monthly Rs. 5,000 Rs. 5,000 Rs. 5,000 investment Assumed 10% 15% 20% annualised return Final corpus Rs. 43 lakh Rs. 89 lakh Rs. 1.9 croreFrom Jan 1, 1984 to Dec 31, 2004 – a 21 year period
Summary Investors needs to saveregularly and invest those savings in higher return assets to create wealth Long Term Systematic Monthly Investment in equity schemes is ideal for this
How Do You Achieve Your Financial Goals• Retirement• Child’s education - international• Family commitments - medical emergency, etc
Retirement PlanningMonthly Household Expenses Retirement corpus required 83,579 to meet post retirement expenses. (if invested at 7%) 1.4 crore 30,000 Monthly investment needed to meet post retirement expenses Inflation 5% 21 Yrs at 12% 12,583 at 15% 8,083 At the time at 18% 5,090 Today of retirement
Child’s Education Educational Degree Monthly investment needed 34,20,000 to achieve this goal at 12% 12,45620,00,000 at 15% 10,166 Inflation 5% at 18% 8,237 11 Yrs When your childPresent actually goes for this degree
Child’s Marriage 43,70,000 Monthly investment needed to achieve this goal at 12% 7,50920,00,000 at 15% 5,466 Inflation 5% at 18% 3,925 16 Yrs When marriagePresent actually takes place
So What Are The Benefits Of Investing Through A Systematic Investment Plan !
Benefit : 1• The Benefit of Long Term Equity Investment – Equities give superior returns among all asset classes over the long term – Mutual Fund has a track record of consistent good performance relative to index.
Benefit : 2• The Benefits of Systematic Monthly Investment – Takes out the risk of market timing – Adds the benefits of the power of compounding and rupee cost averaging
Benefit : 3• Flexibility – You can choose from a wide array of schemes – You can decide to keep invested amounts in an earlier scheme & invest future SIP instalments into a new scheme
Benefit : 4• Added Convenience – Auto debit facility across major cities in India – Regular account statements – Redemption request directly credited into your bank account
Make your investment goals a reality Start a S.I.P. today !
A Rupee Saved Is A Rupee Earned- A Long Journey Begins With A Small Step