systematic investment plan
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Systematic Investment Plan. I don’t have enough money to invest I’m too busy making money to worry about managing it. I don’t have the time or expertise to follow market movements and make investments at the right time. - PowerPoint PPT PresentationTRANSCRIPT
Systematic Investment Plan
I don’t have enough money to invest I’m too busy making money to worryabout managing it. I don’t have the time or expertise tofollow market movements and makeinvestments at the right time
SIP is an investment program that allows you to contribute a fixed amount (as low as Rs.1000) in mutual funds at regular intervals.
SIP
This approach allows you to combine -
Convenience
Rupee Cost Averaging
Flexibility
Power of Compounding
Why SIP?
Investment experts the world over advocate Systematic Investment Plan (SIP)
Instills the much needed investment discipline
Puts to work two powerful forces
Power of Compounding
Preeti started investing at the age of 25. She invested Rs.10,000 each year for ten years and then she stopped contributing
Rohit started investing at the of age 35 and then invested Rs.10,000 each year for 25 years.
Power of Compounding
25 30 35 40 45 50 55 60
76.9 lacs
24.6 lacs
25 year old Preeti invests Rs.10000 annually for 10 years and stops. She does not withdraw any money.
Rohit begins investingat 35 a similar amountof Rs.10000 annually. He invests for the next25 years and he too does not withdraw any money.
Start now!
Rupee Cost Averaging
Technique of buying a fixed rupee amount of a particular investment at regular intervals, regardless of the NAV
Rupee Cost Averaging
Different Scenarios -
Market goes up
Market goes down
Market goes up and then down
Market goes down and then up
Market goes up – (1)
Monthly
Investment
Unit
Price
Units
Acquired
1200 10 120
1200 12 100
1200 20 60
1200 20 60
1200 24 50
Total : Rs.6000 Average: Rs.17.20 390
Average cost of acquisition = 6000/390 = Rs.15.38
Market goes up – (2)
Average cost : = Rs. 15.38
Average Unit price= Rs. 17.20
Value of investments at the end of 5 months = Rs 9360
Profit of Rs.3360
Market goes down – (1)
Monthly
Investment
Unit
Price
Units
Acquired
1200 24 50
1200 20 60
1200 12 100
1200 12 100
1200 10 120
Total : Rs.6000 Average: Rs.15.60 430
Average cost of acquisition = 6000/430 = Rs.13.95
Market goes down – (2)
Average Unit cost = Rs. 13.95
Average Unit Price = Rs 15.60
Value of investments at the end = Rs 4300
Loss is Rs.1700
The loss could have been Rs.3500 for lump sum investment
Market goes up after going down – (1)
Monthly
Investment
Unit
Price
Units
Acquired
1200 20 60
1200 12 100
1200 10 120
1200 12 100
1200 20 60
Total : Rs.6000 Average: Rs.14.80 440
Average cost of acquisition = 6000/440 = Rs.13.64
Market goes up after going down – (2)
Average Unit cost = Rs. 13.64
Average Unit Price= Rs 14.80
Value of investments at the end of 5 months = Rs 8800
Profit is Rs.2800
Market goes down after going up– (1)
Monthly
Investment
Unit
Price
Units
Acquired
1200 20 60
1200 24 50
1200 24 50
1200 20 60
1200 20 60
Total : Rs.6000 Average: Rs.21.60 280
Average cost of acquisition = 6000/280 = Rs.21.43
Market goes down after going up– (2)
Average Unit cost = Rs. 21.43
Average Unit Price= Rs 21.60
Value of investments at the end of 5 months = Rs 5600
Loss is Rs.400 (would have been Rs.1000 if invested at peak price)
How has an SIP worked in these schemes
If you had invested
Rs.1000 every month in
Your total investment of
Rs.12,000 over 1 year would have grown to…
Rs.36,000 over 3 years
would have grown to…
Rs.60,000 over 5 years
would have grown to…
Since inception
(Rs. 1000 per month)
FIBCFRs.13,614
(26.06%)
Rs.63,244
(40.35%)
Rs.178,256
(45.28%)
Rs.686,630
(35.79%)
FIPPRs.13,413
(22.71%)
Rs.63,760
(40.98%)
Rs.175,878
(44.68%)
Rs.986.739
(30.44%)
FIPFRs.11,782
(-3.38%)
Rs.64,044
(41.33%)
Rs.222,860
(56.57%)
1,275,392
30.75%
* As on 30th June, 2006
SIP - The bottomline
Simplicity
Hassle Free
Low acquisition costs
Discipline
Franklin Templeton
All Franklin Templeton equity schemes offer SIP
Now you can invest in SIP on any day of the month
Low entry amount of Rs.1000
Risk factors
Please note that there is no guarantee that SIP will always produce a profit
Before investing, please go through the offer document of the respective scheme for more detailed risk factors.
Thank You
Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAV of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. There can be no assurance that a schemes investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of the schemes. The above are only the names of the scheme and do not in any manner indicate the quality of the schemes, their future prospects or returns. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes. The Mutual Fund is also not assuring that it will make any dividend distributions under the dividend plans of the schemes though it has every intention of doing so. All dividend distributions are subject to the investment performance of the schemes. The investments made by the schemes are subject to external risks. Please go through the offer documents before investing. Statutory Details : Franklin Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seed corpus of Rs.1 lac) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trust Act 1882) and with Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager. The fund offers NAV’s, purchases and redemptions on all business days except during the period when there is a book closure.