SIP or Systematic Investment Plan offered by Mutual Funds is like a GOOD EMI
EMI Instalment
= GOOD EMI Investment
=
WHAT are SIPs?
SYSTEMATIC INVESTMENT PLANS (SIPs) MADE SIMPLE
WHAT WHYWHEREWHENWHAT
are SIPs? SIPs?
to invest via SIPs? to start an SIP? not to do in SIPs
WHAT are SIPs?
Ÿ
in Mutual Funds
Ÿ
similar to a Bank Recurring Deposit- Regular investment in one or multiple schemes
Ÿ
A way of investing REGULAR AND DISCIPLINED
INVESTING PROCESS
ONE OF THE BETTER WAYS TO INVEST IN A MUTUAL FUND
WHY SIPs?
ŸCHEAPER ON THE WALLET
ŸREGULAR AND DISCIPLINED INVESTMENT
Ÿ CREATE WEALTH OVER THE LONG TERM
ŸMAKES MARKET TIMING IRRELEVANT
ŸBENEFITS OF POWER OF COMPOUNDING
- Invest as little as 500 per month
Potential To
- Ensures that one invests at all points of time (high as well as low points of the market)- Benefit from Rupee Cost Averaging
R
Let us look at some of the above aspects in detail…..
WHY SIPs?
CREATE WEALTH OVER THE LONG TERM
Create Wealth Over The Long Term(Illustration)
Period Principal R lac
Final Value R lac
@ 10% p.a.
Final Value R lac
@ 12% p.a.
Final Value R lac
@ 14% p.a.
10 years 1.20 2.07 2.32 2.62
15 years 1.80 4.18 5.05 6.13
20 years 2.40 7.66 9.99 13.16
25 years 3.00 9.57 13.38 27.27
^ *An SIP of growing @ 10%, 12% & 14% p.a.R1000 per month
A small difference of even 2% in returns can change the final amount significantly
* For Illustration purposes only. These are assumed returns and actual returns may vary. Also, returns may vary with the type of underlying asset class. ^ Systematic Investment Plan at the beginning of the month.
RUPEE COST AVERAGING
Rupee Cost Averaging
Receive when ,and lesser units when NAV is higher
more units NAV is lower
Investment (A) NAV (B) No. of Units (A / B) Remarks
R 10000 20 500 Higher NAV ~ Less Units
R 10000 16 625 Lower NAV ~ More Units
Average Cost per unit 17.78
− The cost is thus averaged out as NAV falls
• Longer the SIP period, better the impact of rupee cost averaging• Longer SIP periods may also help lower volatility of returns
Rupee Cost Averaging (Illustration)
Past performance may or may not be sustained in future.For a 20-year SIP in S&P BSE Sensex ending on March 31, 2016. Investment at the start of the monthSource-CRISIL Mutual Fund Research Tool
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Se
ns
ex
Va
lue
How cost per unit has dropped over long investment horizon
Ending Value 25,342
Average Value 6523
Starting Value 3367
S&P BSE Sensex
Sensex rose fr
om 3367 on Mar 31, 1996 to 25342 on Mar 3
1, 2016
BUT Average cost of a unit o
ver the 20-ye
ar period was only R
s.6523
31-M
ar-96
31-M
ar-97
31-M
ar-98
31-M
ar-99
31-
-00
Mar31
--0
1
Mar31
--0
2
Mar31
--0
3
Mar31
--0
4
Mar31
--0
5
Mar31
--0
6
Mar31
--0
7
Mar31
--0
8
Mar31
--0
9
Mar31
--1
0
Mar31
--1
1
Mar31
--1
2
Mar31
--1
3
Mar31
--1
4
Mar31
--1
5
Mar31
-Mar-
16
BENEFITS OF COMPOUNDING
Benefits of Compounding (Illustration)
The longer you stay invested, the higher the potential for growthSIP of R 1000 per month growing @12% p.a.*
Experience the Magic of COMPOUNDING
Period Principal R lac
Final Value R lac
Growth of Principal (Compounding Effect)
10 years 1.20 2.32 almost 2 times
15 years 1.80 5.05 almost 3 times
20 years 2.40 9.99 over 4 times
25 years 3.00 18.98 over 6 times
* For Illustration purposes only. These are assumed returns and actual returns may vary. Monthly investment at the beginning of the month.
WHERE to invest via SIPs?
NO RESTRICTION OF ANY ASSET CLASSfor commencing a SIP
MORE POPULAR FOR EQUITY as an asset class because…− The asset class is relatively more volatile and − SIPs help to even out volatility by purchases made across market cycles
EQUITY SIPs ideally should be long term for 5 years and above
SIPs IN FIXED INCOME may be for short to medium term
FUND HOUSEand its
Points of Presence
INTERMEDIARYBank, Distributor,
Independent Financial Advisor (IFA)
ONLINE through
*investment portals* of Fund House/ Distributors
The first step is to have your KYC
(Know Your Customer) done
KYC form available with Mutual Fund, distributors, RTA or KRA (KYC Registration Agency)
Three Modes to Invest
WHEN to start an SIP?
WHEN to start an SIP?
NO PARTICULAR TIME TO START AN SIP
SIPs actually make market timing irrelevant- Regularity and consistency is more important than timing -
FREQUENCY OF SIPS is typically monthly or quarterly - Monthly SIPs are more popular- SIP date needs to be predefined
WHAT not to do in SIPs (Illustration)
Do not delay or discontinue your SIP
Target of @12% p.a.*R 1 crore at Age 60
Start Early
Every Delay 5 Year Doubles rhe Monthly Investment needed
Start Age Monthly Investment R
25 years 1,540
30 years 2,833
35 years 5,270
40 years 10,009
45 years 19,819
Only needed if you start at 25 years but if you start 5 years later and so on
R 1,540 p.m.R 2,833 p.m.
* For Illustration purposes only. These are assumed returns and actual returns may vary. Monthly investment at the beginning of the month.
Start your GOOD EMI today!
Disclaimer
Information contained in this presentation is not a complete representation of every material fact and is for informational purposes only. It cannot be used or considered to be an offer to sell or buy units of Franklin Templeton Mutual Fund schemes. The recipient is advised to consult his/her advisor/ tax consultant prior to arriving at any investment decision.
An investor education and awareness initiative by Franklin Templeton Mutual Fund.
Franklin Templeton Asset Management (India) Pvt. Ltd.
Indiabulls Finance Centre, Tower 2, 12th and 13th floor, Senapati Bapat Marg, Elphinstone (W), Mumbai 400013
Tel (91-22) 6751 9100 • Fax (91-22) 6639 1281 • www.franklintempletonindia.com
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
For more information, Visit www.thegoodemi.com
