This document discusses the benefits of systematic investment plans (SIPs) for achieving financial goals like retirement, children's education, and family commitments. SIPs allow investors to invest small monthly amounts that benefit from the power of compounding over the long term. Equity investments through SIPs are ideal for meeting long-term goals since equities have historically offered higher returns than other asset classes. Regular investing through SIPs also reduces market timing risk. The document provides examples of the monthly investments needed through SIPs to achieve common financial goals like retirement and children's education to demonstrate how SIPs can help investors achieve their goals.

1. Systematic Investment Plan (SIP)
Simple
Min Investment of only Rs.500
Intelligent
Benefit from the Power of Compounding
Practical
Link to your Financial Goals

2. Did you know ?
If your current monthly expenses are
Rs. 30,000/- p.m, after 20 years you will
require Rs. 80,000/- p.m to maintain the
same lifestyle
Assuming inflation rate of 5%

3. Did you know ?
An education degree for your child
which currently costs Rs. 10 lakh will
cost Rs. 21 lakh after 15 years.
Assuming inflation rate of 5%

4. 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

5. Individual Investor: Life Stages
Earnings
Consumption
Savings
22 27 40 60
Young Independent Young Married Middle Age Retirement
All individuals have a finite period to save for their investment goals

6. 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 37,689
30,000
Today 5 years 15 years 20 years Today 5 years 15 years 20 years
At inflation of 5%
Investors need to beat inflation

7. 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

8. Individual investors are scared of …..
The Downside Risk in Equities
The Risk of Market Volatility
The Risk of Market Timing

9. What else makes a material impact on
investments in equity ?

10. 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 on
highest sensex value lowest sensex value
1st day of every month
every year every year
Market timing does not matter over the long term

11. 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 crore
From Jan 1, 1984 to Dec 31, 2004 – a 21 year period

12. Summary
Investors needs to save
regularly and invest those
savings in higher return
assets to create wealth
Long Term Systematic
Monthly Investment in
equity schemes is ideal
for this

13. How Do You Achieve Your Financial Goals
• Retirement
• Child’s education - international
• Family commitments - medical emergency, etc

14. Retirement Planning
Monthly 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

15. Child’s Education
Educational Degree
Monthly investment needed
34,20,000 to achieve this goal
at 12% 12,456
20,00,000
at 15% 10,166
Inflation 5%
at 18% 8,237
11 Yrs
When your child
Present actually goes
for this degree

16. Child’s Marriage
43,70,000
Monthly investment needed
to achieve this goal
at 12% 7,509
20,00,000
at 15% 5,466
Inflation 5%
at 18% 3,925
16 Yrs
When marriage
Present actually takes place

17. So What Are The Benefits Of Investing Through
A Systematic Investment Plan !

18. 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.

19. 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

20. 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

21. Benefit : 4
• Added Convenience
– Auto debit facility across major cities in India
– Regular account statements
– Redemption request directly credited into your bank account

22. Make your investment goals a reality
Start a S.I.P. today !

23. A Rupee Saved Is A Rupee Earned
- A Long Journey Begins With A Small Step

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