sip and equity investment

SIP and Equity Investment – Pros and Cons

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Systematic Investment Plan Of Investing (SIP)

Systematic Investment Plan (SIP) is less risk involving style of investing in which a person relies on the investment firm to invest fixed amount of money every month in mutual funds/bonds .It is similar to recurring deposit.

Advantages : • Flexibility of Investment : Person can invest according to his/her pocket.

• No knowledge of stock investment is required as it is the responsibility of the investment company to invest the money .

• The risk factor involved is less as the profit/loss is evenly spread out across a number of shares.

Disadvantages:

• No transparency as the investor never gets to know the stocks in which his/her money is invested.

• Every company has a different growth pattern which means that one’s knowledge pool has to be huge in order to be successful.

• Since risk involved is less ; reward is also less .

Copyright © 2012 21G Investments. All rights reserved.

SIP Calculator

• Rs 3000/month for about 24 years yield 1 Rs CR* approx.

1 36000 9 687091 17 31344492 78480 10 846767 18 37346503 128606 11 1035185 19 44428874 187756 12 1257519 20 52786075 257552 13 1519872 21 62647566 339911 14 1829449 22 74284127 437095 15 2194750 23 88015268 551772 16 2625805 23.8 10075945

* Based on 18 % annual return

Table 1 : Yearly Growth for money invested in SIP


HDFC Fund Growth Graph

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Long Term Equity Investment

Long Term Equity Investment involves both technical and fundamental styles of equity investment in which the investor invests the money in the stock market for longer period of time .

Advantage : • It is the safest form of equity investment as the money is invested for a longer time keeping in view

the bigger gains rather that small losses .Money is invested keeping in view the company’s growth patterns and policies on which the company is going to grow in times to come.

• Everyday fluctuations in the market do not come in to picture as the money is invested for longer periods of time. So we do not need to spend a lot of time on it everyday.

Disadvantage :

• It involves a lot of patience as everyday fluctuations are not easy to deal with all the time.• The investor blocks the money for a substantial amount of time.


Market Movements w.r.t. time

05- 06 06-07

07-08

08-09 09-10

10-11

11-12

12-


Why Long Term Investment is Better ??

• Money is invested according to the market trend

• Strategic Investments lead to faster and larger capital growth than SIP.

• Much more transparent than SIP


Investment Graph in the Last 5 years …

05- 06 06-07

07-08

08-09 09-10

10-1112-

11-12Sold 80% of the portfolio before the big crash

Bought back 20% of the portfolio

Bought stocks at 10 K market level and sold at 13K levels

Identified stocks for Long Term Investment and invested 3% every month . By Oct’11 42% portfolio was invested .

Bought back 48% of the rest of the portfolio at 15 K levels.


What we do as a company ???

• Select stocks based on capital investment

• Invest the capital based on the market movement and stock analysis

• Provide growth guide of the capital in times of market crisis. • Maintain transparency with the client ‘s capital invested at all times.


For further assistance:Gaurav Verma21G Investmentshttp://www.facebook.com/pages/21G-Investments/353301421363897

Do You Have Any Questions?


Disclaimer:

The slides are for educational purpose only and these are my personal views which can be right or wrong.

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