If you want to invest in mutual
funds but don't have a lot of money or time to research different schemes, a systematic investment plan (SIP) might be a good option for you.
A SIP
is a plan in which you invest a fixed amount of money at regular intervals (such
as monthly or quarterly) into a mutual fund of your choice.
This
way, you can save regularly with a smaller amount of money and benefit from the
power of compounding and Rupee-cost averaging.
What is compounding?
It is the
process of earning interest on your interest.
For example,
if you invest Rs100 at 10% annual interest,
after one year
you will have Rs110.
After two
years, you will have Rs121 (Rs110 + 10% of Rs110).
After three
years, you will have Rs133.10 (Rs121 + 10% of Rs121).
And so on. As
you can see, your money grows faster over time because of compounding.
What is Rupee-cost averaging?
It is the
strategy of buying more units when the price is low and fewer units when the
price is high.
For example,
if you invest Rs100 every month into a mutual fund that has a unit price of Rs10
in January,
Rs8 in
February, and
Rs12 in March,
you will buy
10 units in January,
12.5 units in
February,
and 8.33 units
in March. Y
our average
cost per unit will be Rs 9.73 (Rs300 / 30.83 units).
Value
of your holdings will be 30.83 (10+12.50+8.33) X Rs 12 ( Present Net Asset Value) =369.96. ie an appreciation of Rs 69.96 for an
investment of Rs 300/= .
This
way, you can lower your average cost over time.
You can invest in different types of SIPs that suit different investor
needs and to add more value . Some common types suggested are:
- Top-up
SIP: This type allows you
to increase your investment amount periodically. This can help you boost your
returns and reach your goals faster.
- Flexible SIP: This type allows you to increase or
decrease your investment amount depending on your cash flow situation. This can
help you adjust your investments according to your income and expenses.
- Step-down
SIP: This type allows you
to decrease your investment amount periodically. This can help you reduce your
exposure to risk as you approach your goal or retirement age.
- Trigger SIP: This type allows you to set certain
triggers (such as market index level, date, event) that will automatically
change your investment amount or switch between schemes. This can help you take
advantage of market opportunities and protect your gains.
To start a SIP, all you need is
an online account with a mutual fund platform or an app like NJ E Wealth. Contact
an AMFI Certified Mutual Fund Distributor as below for free online councelling
and if required a Personal Contact .
You can
choose from thousands of schemes across different categories (such as equity,
debt, hybrid) and select the one that matches your risk profile and goal
horizon. You can also use online tools like SIP calculators to estimate how
much money you need to invest and how much return you can expect from your SIP.
A SIP is a simple and smartest
way to invest in mutual funds for beginners as well as experienced investors.
It helps you build discipline, diversify your portfolio, reduce volatility, and
achieve long-term wealth creation.
contact : S.Sridhar Rajasekar , AMFI Certified Mutual Fund
Distributor. Cell :9442388779
No comments:
Post a Comment