EMI =
Instalment
GOOD EMI =
Investment
SIP or Systematic Investment Plan
offered by Mutual Funds is like a GOOD EMI
SYSTEMATIC INVESTMENT PLANS (SIPs)
MADE SIMPLE
WHAT are SIPs?
WHY SIPs?
WHERE to invest via SIPs?
WHEN to start a SIP?
WHAT not to do in SIPs
WHAT are SIPs?
SIPs are a
REGULAR AND DISCIPLINED way of
investing in mutual funds
INVESTING
PROCESS
similar to a Bank Recurring Deposit
- Regular investment in one or multiple schemes
SIPs or Systematic Investment Plans are one of the
BEST WAYS TO INVEST IN A MUTUAL FUND
WHY SIPs?
CHEAPER ON THE WALLET
- Can be as low as R 500 per SIP per month
REGULAR AND DISCIPLINED INVESTMENT
Potential To CREATE WEALTH OVER LONG RUN
MAKE MARKET TIMING IRRELEVANT
- Ensures that one invests at all points of time (high as well as low points of the market)
- Benefits from Rupee Cost Averaging
Provide BENEFITS OF COMPOUNDING
Let us look at some of the above aspects in detail..
WHY SIPs?
CREATE WEALTH
OVER LONG RUN
Create Wealth Over The Long Run
(Illustration)
SIP^ of R1000 per month growing @ 10%, 12% & 14% p.a.*
Period
Principal
R lac
Final Value
R lac
@ 10% p.a.
Final Value
R lac
@ 12% p.a.
Final Value
R lac
@ 14% p.a.
10 years
1.20
2.07
2.32
2.62
15 years
1.80
4.18
5.05
6.13
20 years
2.40
7.66
9.99
13.16
25 years
3.00
13.38
18.98
18.98
A small difference of even 2% in returns can change the final amount drastically
* For Illustration purposes only. These are assumed returns and actual returns may vary. Also, returns may vary with the type of underlying asset class.
^ Systematic Investment Plan at the beginning of the month.
RUPEE COST
AVERAGING
Rupee Cost Averaging
Receive more units when NAV is lower,
vice versa when NAV is higher
Investment (A)
NAV (B)
No. of Units (A / B)
R 10000
20
500
Higher NAV ~ Less Units
R 10000
16
625
Lower NAV ~ More Units
Average Cost per unit
Remarks
17.78
The cost is thus averaged out as NAV falls
Longer the SIP period, better the impact of rupee cost averaging
Longer SIP period may also help to lower volatility of returns
Rupee Cost Averaging (Illustration)
How average cost per unit has dropped
over long investment horizon
35,000
30,000
Sensex Value
25,000
20,000
15,000
10,000
5,000
Starting Value
3,111
T
BU
5
01 380
2
6
c
De ly R
n
8 i s on
1
1
6, d wa
2
o
io
5 t r per
9
19 yea
c
De 20n
i
e
11 er th
1
3 t ov
m
o
fr a uni
ose st of
r
x
o
nse ge c
e
S ra
e
Av
Average Value
6,380
Past performance may or may not be sustained in future.
For a 20-year SIP in S&P BSE Sensex ending on December 31, 2015. Investment at the start of the month
Source-CRISIL Mutual Fund Research Tool
Ending Value
26,118
S&P BSE Sensex
BENEFITS OF
COMPOUNDING
Benefits of Compounding (Illustration)
Longer you stay the wealthier you may be
SIP of R 1000 per month growing
Experience the
@12% p.a.*
Magic of COMPOUNDING
Period
Principal
R lac
Final Value
R lac
Growth of Principal
(Compounding Effect)
10 years
1.20
2.32
almost 2 times
15 years
1.80
5.05
almost 3 times
20 years
2.40
9.99
over 4 times
25 years
3.00
18.98
over 6 times
* For Illustration purposes only. These are assumed returns and actual returns may vary. Monthly investment at the beginning of the month.
WHERE to invest via SIPs?
NO RESTRICTION OF ANY ASSET CLASS
for commencing a SIP
MORE POPULAR FOR EQUITY as an asset class because
The asset class is relatively more volatile and
SIPs help to even out volatility by purchases made across market cycles
EQUITY SIPs ideally should be long term
of 5 years and above
SIPs IN FIXED INCOME
may be for short to medium term
Three Modes to Invest
FUND HOUSE
and its
Points of Presence
INTERMEDIARY
Bank, Distributor,
Independent
Financial Advisor (IFA)
ONLINE
Through
*
investment portals
* of Fund House/ Distributors
Key Step is KYC or
Know Your Customer form
KYC form available with mutual fund, distributors,
RTA or KRA (KYC Registration Agency)
WHEN to start a SIP?
WHEN to start a SIP?
NO PARTICULAR TIME TO START A SIP
- Regularity and consistency is more important than timing
- SIPs actually make market timing irrelevant
FREQUENCY OF SIPS
is typically monthly or quarterly
- Monthly SIPs are more popular
- SIP date needs to be predefined
WHAT not to do in SIPs (Illustration)
Delay or discontinue a SIP
Target of R
Start Age
1 crore at Age 60 @12% p.a.*
Monthly Investment R
25 years
1540
30 years
2833
35 years
5270
40 years
10009
45 years
19819
An Early Start is Good
Every 5 Year Delay
Doubles Monthly
Investment needed
Only R 1540 p.m. needed if you start at 25 years but R 2833 p.m.
if you start 5 years later and so on
* For Illustration purposes only. These are assumed returns and actual returns may vary. Monthly investment at the beginning of the month.
Start your
GOOD EMI
today!
Disclaimer
Information contained in this presentation is not a complete representation of every material fact and is for informational
purposes only. It cannot be used or considered to be an offer to sell or buy units of Franklin Templeton Mutual Fund schemes.
The recipient is advised to consult his/her advisor/ tax consultant prior to arriving at any investment decision.
An investor education and awareness initiative by Franklin Templeton Mutual Fund.
For more information, visit
www.thegoodemi.com
Franklin Templeton Asset Management (India) Pvt. Ltd.
Indiabulls Finance Centre, Tower 2, 12th and 13th floor, Senapati Bapat Marg, Elphinstone (W), Mumbai 400013
Tel (91-22) 6751 9100 Fax (91-22) 6639 1281 www.franklintempletonindia.com
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
