sip leaflet investor education hdfc
TRANSCRIPT
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Consider Systematic Investment Plan (SIP)in Mutual Fund Schemes.
Dont depend on predictions.Any day is a good day to start.
To know more, contact your financial advisor or visit www.hdfcfund.com/InvestorEducation
Its time to let go stock market predictions and assumptions. You need not speculate the ups and downs of the market
to achieve your goals. Make way for Systematic Investment Plan (SIP), wherein you can invest a fixed sum regularly in
the selected mutual fund scheme. SIP averages out your cost of acquisition by purchasing more units when prices are
low and lesser units when prices are high. Hence, you can better your returns over the long term by averaging out
market volatility. So invest in mutual funds via SIP, because any day is a good day to start accomplishing your goals.
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#Disclaimer: The illustrations above are merely indicative in nature and should not be construed as investment advice. They do not in any manner imply or suggest current or future performance of any Mutual Fund Scheme. Rupee Cost Averaging and SIP neither ensure you profits nor protect you from making a loss in declining markets.
16.240
16.266
15.123
15.266
16.845
16.991
15.501
15.114
12.774
13.848
14.566
15.111
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
12,000
61.5764
61.4779
66.1244
65.5050
59.3648
58.8547
64.5120
66.1638
78.2840
72.2126
68.6530
66.1770
788.9056
January
February
March
April
May
June
July
August
September
October
November
December
Total
Rupee Cost Averaging - An illustration#
NAV Per Unit (`)Month
Amount(`) Units
What are SIPs?
Systematic Investment Plan (SIP) is an investment technique whereby the investor invests a fixed sum of money at regular intervals, say once a month or once a quarter.
For instance, your SIP may involve investing Rs.1000 On the 5th of every month In a particular scheme of a mutual fund For the next five years Essentially SIPs help avoid Decision Paralysis associated with emotions of fear and greed and takes advantage of ups and downs in the market.
Take Advantage of Rupee Cost Averaging
Most investors think that buying stocks at low prices and selling
them when prices are high is a favourable strategy. But this is
hard to achieve and involves risky variables.
A more successful investment strategy is to adopt the method
called Rupee Cost Averaging. Under Rupee Cost Averaging, more
units are purchased when prices are low and fewer units when
prices are high. Imagine investing Rs. 1,000 every month in an
equity mutual fund scheme starting in January. The following
table illustrates how this investment would have behaved from
January to December on the 5th of every month.
The NAVs are illustrative only.
As seen in the table, by investing through SIP, you end up buying more units when the price is low and fewer units when the price is high. However, over a period of time these market fluctuations are generally averaged. The average cost of your investment is often reduced. Hence, the average cost per unit in the above illustration is approximately Rs. 15.21.
Why SIPs?
Regular investing for long periods of time deliver healthy returns. An Illustration:
*Monthly instalments, compounded monthly, for a 15-year period.The above illustration is only to show the power of compounding.
Comparing SIP with any other method of investing
Benefits of SIP Disciplined investments (Remember, an investors worst enemy is not the stock market, but his own emotions) Reach your financial goals Take advantage of Rupee Cost Averaging, i.e. get more units when prices are low and buy less when prices are high Grow your investments with compounded benefits Do all this effortlessly
Savings permonth(Rs.)
(for 15Years)
Totalamount
invested (in Rs.Lacs)
Assumed Rate of return (per annum)
Monthly Savings - What your savings may generate#
5,000
4,000
3,000
2,000
1,000
9.0
7.2
5.4
3.6
1.8
14.6
11.7
8.8
5.8
2.9
17.4
13.9
10.4
7.0
3.5
20.9
16.7
12.5
8.3
4.2
(Rupees in Lacs, 15 years later)*
6.00% 8.00% 10.00%
Recurringnature of
SIPs
Long terminvesting
Fixedamount at
everyinterval
Buildingwealth
MeetingLong term
goals
Loweraveragecost of
investing
Buildingwealth
Buy lesswhen theprice is
high
RegularSavings
Buy morewhen theprice is
low
Benefit fromthe power ofcompunding
Regularinvestments
PresentingSystematic Investment Plan - A Prudent Investment Strategy
SIP
Uncomplicated and largely automatic Small amounts of funds required No need to time the market Averages out cost per unit
Other methods of investing
Good amount of research and market tracking required Lump sum funds required Make your best attempt to time the market Cost per unit depends on your market timing
NA
V p
er
Unit
(`)
0
2
4
6
8
10
12
14
16
18
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
When the NAV is the highest, you buy the least number of units
When the NAV is the lowest, you buy the highest number of units
78.2840units
16.991
12.77458.8547units