your perfect sip and swp: aid for financial diet plan systematic investment plan (sip) route. a...

Download YOUR PERFECT SIP AND SWP: AID FOR FINANCIAL DIET PLAN Systematic Investment Plan (SIP) route. A must-do

If you can't read please download the document

Post on 03-Jul-2020




0 download

Embed Size (px)


  • *This content was created exclusively for UTI Swatantra. Visit for more information

    To know more give a

    missed call on 8655097225

    ● World Health Day is celebrated on 7th April each year by the World Health Organisation to draw attention to critical health issues. The slogan for World Health Day is “Health For All.”

    ● The theme of World Health Day 2019: Universal health coverage, everyone, everywhere.

    As we pledge to improve our physical health this World Health Day, let’s take the opportunity to introspect upon our financial health too.


    STAGE 2: BETWEEN 30-50 (Married with kids)

    ● As you move into your 30’s, you realise the importance of a balanced diet and make a conscious attempt to eat healthily.

    ● Your relationship status is likely to have changed to married with kids in this phase.

    ● You have increased cash flows, and your financial aspirations include the future of your spouse and children.

    ● Just like you would be careful with your physical health, it is time to pay attention to your financial health by taking the following steps:

    ► Ensure that your insurance coverage is adequate to protect your family from facing financial woes in your absence.

    ► Beef up your Emergency Fund. ► You can consider a SIP top-up facility

    that increases your investment by a minimum of 10% annually.

    ► Start saving for the education of children as early as you can.

    STAGE 3: 50 AND BEYOND (Moving towards retirement) ● You are careful about

    your diet and are probably cutting out carbs and controlling fat.

    ● Similarly, in your financial diet, it’s time to re-assess your investments.

    ● Consider balanced Equity to Debt ratio as you move closer to your goals.

    ● At this stage, you can consider a Systematic Withdrawal Plan (SWP) from your existing investments.

    ● An SWP is in effect opposite of a SIP that allows you to withdraw a stipulated amount each month. It ensures a regular cash flow in your retired years.

    STAGE 1: IN YOUR 20’S (Single and independent)

    ● When you are fit and young, we tend to neglect our diet and the need for regular exercise.

    ● You can build robust financial health by inculcating good financial habits early.

    ● You must separate needs from wants, setting financial goals and instil financial discipline first.

    ● A simple way to do so is by investing in Mutual Funds to meet financial goals through the Systematic Investment Plan (SIP) route.

    ● A must-do at this stage is the creation of an Emergency Fund that can suffice for 6-12 months using Liquid Funds.


    Insurance that provides financial protection and liquid savings that can come

    to your aid in times of a financial emergency

    are equivalents of carbohydrates in

    your financial diet.

    Financial equivalents

    of proteins are asset

    classes such as Equity and Debt.

    Financial equivalent of right fat consumption is maintaining the

    right balance between Equity and Debt

    according to your

    risk appetite, time horizon

    and goals.

    In this fast-paced age, you know the importance of being physically fit. However, have you given your financial health as much thought?

    Consumption of fat helps

    your body store energy and aids



    YD R






    A sound financial plan can be a blueprint or a “diet plan” for investments at various life stages. While every individual has different financial goals and thus must have a unique customised plan

    for investments. Here are some broad guidelines you can follow at various life stages:

    Are you confused about your financial diet? Read on for the perfect solution. As we all know, there are three primary food groups - Carbohydrates, Proteins and Fats.

    Now let’s look at their financial equivalents.

    *This content was created exclusively for UTI Swatantra. Visit for more information

    Carbohydrates are the most important part of your meal as

    they are the main source

    of energy.Proteins are an

    essential part of your diet as they

    promote growth.


    Good financial habits equal good

    financial health; start today!

    *This content was created exclusively for UTI Swatantra. Visit for more information


    A PERFECT FINANCIAL DIET Just like good food habits, good money habits from the start can ensure that you effectively meet your

    financial goals. Let's talk about two good financial habits that you can inculcate with Mutual Funds.

    SIP SWP What is it - Systematic

    Investment Plan What is it - Systematic

    Withdrawal Plan What does it do - Allows you to invest in a Mutual Fund scheme of your choice periodically in small amounts?

    What does it do - Allows you to withdraw a fixed amount from your existing investment by selling some units? In effect, it's an opposite of a SIP.

    Advantages - Cost averaging and compounding. ● Cost averaging means,

    you buy more units when markets are low and lesser units when markets are high. That averages your purchase cost and also protects against volatility.

    ● Compounding means, the returns from your investment are re-invested in the principal amount of investment. Thus the longer you remain invested in a SIP, the more you stand to gain.

    Advantages - Cost averaging and Tax benefits. ● Cost averaging: The

    same principle of cost averaging is applicable in the SWP context as well.

    ● Tax efficiency: Any gain on the sale of MF units attracts Short Term Capital Gains Tax (STCG) of 15%. However, the sale of SWP are in smaller units from the principal amount and thus does not attract STCG.

    How to use a SIP You can tie each SIP you invest in a separate financial goal. You can begin with an investment of as low as ` 500 and use the top-up facility of SIPs to increase your investments as your salary or cash flow increases.

    How to use an SWP An SWP is an effective way of earning a fixed income at regular intervals from your existing investments in Mutual Funds.

    Investing in MFs through the SIP facility is akin to making an EMI payment but towards the goal of wealth creation. By linking each SIP to a separate financial goal, you can ensure that you can meet all your financial goals promptly.

    An SWP is especially helpful for a retiree looking to supplement pension income.


    Learn how you can use SIP and SWP

    facility to meet your financial goals efficiently

    ● No matter how less your salary is at the beginning of your career, you can inculcate good financial habits right at the start.

    ● Chalking out a financial plan before you begin taking small steps towards each financial goal can help you meet all of these goals effectively.

    ● You can start a SIP towards a financial goal with as less as ` 500 per month and increase it with every rise in salary.

    ● However, SIPs will work if you remain invested for the long term. Patience is the key, as SIPs provide the benefit of compounding.

    ● The longer you stay invested, the more you stand to gain.


    For more details, follow us on Twitter @utimutualfund; Email queries or suggestions: Please mention ‘Swatantra in The Hindu’ in subject line. For more such financial advice, head to our website: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

    In the next edition: The Indian Premier League is not just about entertainment. If you look closely, it also teaches valuable lessons on investing. Find out more about IPL and investments in the next edition.

    Wondering how the IPL can help you in your investment journey? Don't miss our show on: 'Are you ready for IPL: Investment Premier League'. Only on UTI Swatantra Facebook Live on 11th April 2019 from 5 pm onwards.


View more >