SIP, or Systematic Investment Plan, allows investors to invest small amounts in mutual funds regularly by automatically debiting a specified amount from their bank account each month. This enables small investors to benefit from rupee cost averaging by investing during market ups and downs. The key advantages of SIP are that it is affordable for small investors, reduces market risk, provides compounding returns, and ensures consistent investments through an automated process without requiring market timing.

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SYSTEMATIC INVESTMENT PLAN
Submitted By :
Sudarshan poojary
DPGD/AP12/1061
Prin. L.N. Welingkar institute of Management
Development & Research

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What is a SIP ?
 SIP means Systematic investment Plan
 It is one of the ways to Invest in Mutual Funds
 Through SIP you can invest in mutual Funds
in small investment on a monthly basis
 The investment is done directly by debiting
your bank account on a specified date
 You can start your SIP by filling up a simple
SIP form and providing bank auto debit
Mandate.

3. Things you should know about SIP
 Your SIP does not stop if you miss an
installment
 The AMC does not charge you any money for
missing an installment
 Your bank however, may charge you as per
banks policies
 All SIPs are done in open ended funds
 There is no lock in for your SIPs ( except tax
saving)3

4. Features of SIP
 Affordable to small investors
 Low market risk through rupee cost averaging
 Compounding effect
 Easy liquidity
 Easy mode of Payment
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5. Advantages of SIP
 It is entirely mechanized process and involves
no complications
 Investments are consistent and steady
 Power of Rupee Cost Average : Market’s
volatility shall work wonders for you.
 It enables to over come spending and
encourage savings, thereby securing future
 It will not cause strain on one’s budget as
amount invested is very less5

6. Disadvantages of SIP
 Limited options of dates.
 Way out
 Fixed amount
 Stopping intermediate payment:
 Lot of delay between actual application &
start/stop of SIP:
 Does not suit people with unpredictable cash
flows
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7. Disadvantages of SIP
 Portfolio risk remains
 Ignore the market Swings
 Periodical review of investments
 Timeframe for the Mutual Fund SIP:
 Contribution towards Mutual Fund SIP Changes
 Portfolio Review and Mutual Fund SIP
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Why Invest ?
 Children’s education / marriage
 Medical Emergency
 Retirement
 Aspirational goals – House , Foreign Holiday
 Other Obligations

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 The lower interest rates over the years have been worrying
him.
 He decides to take the help of Sreeni , financial advisor.
 After carefully evaluating his financial goals and time required
to achieve his financial goals , he advises him to invest in
equity mutual funds for following reasons
— Portfolio diversification
— Superior returns ( refer slide on cumulative annualized returns
for different asset classes for details )
Systematic Investment Plan

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 However, Anil is not comfortable investing into equity
mutual funds as they are volatile and therefore risky
and avoidable.
 Sreeni advises Mahesh to register for Systematic
Investment Plan (SIP) and make use of volatility in
the market rather than get worried and avoid
investing in equity mutual funds.
 Anil is not clear as to how SIP will work to his
advantage and requests for more details
 Sreeni explains as follows :
Systematic Investment Plan

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Systematic Investment, An
example
 Rahul & Viru are two friends. Rahul decides to invest using SIP
whereas Viru decides to make lump sum investment.

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Systematic investing , An example

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Systematic Investing, An example

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Why Systematic Investing?
 The Goal of most investors is to buy when the
prices are low, and sell when the prices are
high.
 Sounds simple, but trying to time the market
like this is :
1. Time Consuming
2. Risky
3. And almost Impossible
 A more successful strategy is to adopt
Rupee Cost Averaging.

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Three common reasons for not
investing
 I don’t have enough money to invest
 I am too busy making money to worry about managing
it
 I don’t have the time or expertise to follow the market
movements and make investments at the right time.
SYSTEMATIC INVESTMENT PLAN
is the only answer to all reasons.

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How to make Sip work for you ?
Set your financial goals
Identify the scheme
Decide the SIP amount
Look for a long term commitment
Aim for the big picture
Start investing.

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Thank You