Systematic Investment Plan



SIP: Your key to financial freedom..

The Systematic Investment Plan (SIP) is a simple and time honored Financial Planning Tool for accumulation of wealth in a disciplined manner over long term period. The plan aims at a better future for its investors as an SIP investor gets good rate of returns compared to a one time investor.

We all have various dreams that we want to realize – owning a Car, a House or going on a Vacation. Besides these, we also need to plan for Children's Education, their Marriage and our Retirement. Achieving these dreams may seem like climbing Mt Everest, but its possible if you prepare for it – Step by Step SIP or systematic investment planning is method through which you can invest in mutual funds through small and periodic installments. Infact you can invest as low as Rs. 1000/- on a monthly basis. Moreover you can also select the tenure of the installments. We recommend minimum investment tenure of 3 years.

Invest Regularly

Systematic investing has a compounding effect on your investments. In the long term, an investment as low as Rs 1000/- per month swells up into a huge corpus. Let us refer to following table showing value of investment made regularly through SIP.

(Return on investment has been assumed to be 15% p.a. though its been more than 18% for last 6 years)

Above working shows that regular investment of mere Rs. 1,500 can make you CROREPATI at the end of 30th Year. Similarly regular investment of Rs. 3,000 can make you CROREPATI at the end of 25th Year. Isn't that incredible?

Start Early

Now that we know that the power of compounding can create magic for your investments, starting your investments early also has its own advantages. Starting early means that the power of compounding starts acting on your money earlier thereby generating higher returns. Lets consider example, where A wants to save Rs. 1,000 p.m. till the age of retirement i.e. 60 years.

An individual who starts planning for his retirement at 25 yrs of age by investing a modest Rs. 1000 p.m. collects upto Rs. 1.50 Crores on retirement. In case he delays the decision by mere 5 years, his wealth upon retirement reduces significantly (more than 50%). That's why it's important to start early in investing!!


By Chetan Oswal

CERTIFIED FINANCIAL PLANNER,CFP are owned by Financial Planning Standard Board Ltd.(FPSB)outside the United States. FPSB India is the marks licensing authority for the CFP marks in India through agreement with the FPSB. Copyright © | Software solutions for financial planners by Wolters Kluwer.