Systematic Investment Plan

Systematic Investment Plan Simple, time-honored strategy for disciplined investors

Ways Of Investment  One Time Outright Payment

 Periodic Payments

One Time Outright Payment If you invest directly in the fund, you just hand over the cheque and you get your fund units depending on the value of the units on that particular day.

Example: If one wants to invest Rs 60,000. All you have to do is approach the fund and buy units worth Rs 60,000.

Periodic Payments (SIP)

It means every month, you commit to investing, say, Rs 5,000 in your fund. At the end of a year, you would have invested Rs 60,000 in your fund.

The Power of SIP  Higher

the rate of return, higher the wealth created

 Longer the time period more the wealth created  The more you earn makes a difference

5

Why choose SIP? SIP offers distinct advantages over conventional investments by offering the following benefits  Gives the investor an option to investment in asset classes that beats inflation  Exponential growth through compounding  Lower average purchase cost of assets  Investment at lower risk  Low investment amount

Why SIP 1. Power of Compounding 2. Rupee Cost Averaging 3. Convenience

The Power of Compounding

Value of Investment (Rs. Lacs)

Rs. 10000 saved every year for 30 years invested at 6%, 8%, 10% and 15% every year 60 50 40 30 20 10 0

49.99 Lacs

8.38 Lacs

6

12.24 Lacs

8

18.09 Lacs

10

15

Returns (%)

Higher the returns from the invested amount, greater the benefit accrued due to the power of compounding

Lower average purchase cost • SIP allows one to invest a fixed amount at periodic intervals irrespective of market performance • Gives investors an opportunity to buy more units when the price is low and fewer units when the price is high • Reduces the negative impact of price volatility by using a concept called Rupee Cost Averaging • Enables averaging out your investments at less than prevailing market rates

Lower average purchase cost That means that, every month, you commit to investing, say, Rs 1,000 in your fund. At the end of a year, you would have invested Rs 12,000 in your fund. Example The NAV on the day you invest in the first month is Rs 20; you will get 50 units. The next month, the NAV is Rs 25. You will get 40 units. The following month, the NAV is Rs 18. You will get 55.56 units. So, after three months, you would have 145.56 units. On an average, you would have paid around Rs 21 per unit. This is because, when the NAV is high, you get fewer units per Rs 1,000. When the NAV falls, you get more units per Rs 1,000.

Summing Up :  You buy more when the market is down  You buy less when the market is up  Over time the market fluctuations are averaged  Most likely you will realize a saving on the cost per unit  This leads to HIGHER RETURNS

Convenience Less Burden Lower Investment Auto Debit Time Saving Flexibility