The Power of Systematic Investment Planning (SIP)

Systematic Investment plan or SIP is one of the best investment tools for anyone who has a regular income. If you are a young salaried and want to save money, there is nothing more convenient than an SIP.



Investing fixed amount of money on fixed date every week, month or quarterly is called Systematic Investment.

There are three main options you can choose for investment in this plan.

1. Shares - Buying same amount of shares every month without looking at price.
2. RD in Banks - same amount every month being fixed
3. SIP in Mutual Funds - Investing same amount of money every month on a pre-decided date

Any option can be taken according to your risk profile.

Let's see the pros and cons of each option.

1. Buying shares every month in a fixed quantity is a good idea. But as we all know, investing in shares requires lots of research, good amount of money and lots of time to monitor. Risk is very high in shares and it gives the option to choose fixed quantity but not fixed amount of money. So you cannot plan in advance how much money you will need every month.

2. Bank RDs are safest option as it gives you fixed maturity amount after a fixed period. But there are a few things that make it less popular option.

• Low liquidity. If you want to withdraw money before the maturity date the return will be less than expected.
• You cannot partially withdraw small amount in between even if you need it.
• The interest rates are very low compared to other options which make it less popular in young people.

3. Mutual Funds SIP offers most flexible choices according to your budget, liquidity and risk profile. You can even start from just Rs. 500/- a month and withdraw within 7 days if you need it in emergencies. You get returns as good as share market but no need to do any research as you money will be managed by professionals. It makes it less risky in comparison to direct shares. It is very much recommended to take advice from Independent Financial Advisers to plan your investments and help you achieve your Long Term Financial Goals.

I will share a real life example of planning we did for one of my esteemed client who has taken a Home Loan in Year 2016 for 45 Lakh Rupees (Monthly EMIs payable for next 20 years) and is now planning to pay it off completely by Year 2025 with the help of Systematic investing in mutual funds. He wanted me to plan his part of SIP investment in such a way so that he could reduce his total home loan outstanding by systematically withdrawing 5 Lakh Rupees every year and to clear it off completely well before Year 2025.

I am so glad to share that he has already paid off 10 Lakh Rupees in last 2 years and now his total Home loan outstanding has come down to 35 Lakh Rupees. I salute him for keeping his trust in me despite all kind of volatile moments in equity markets in last 5 years of our relationship. I simply love to share his example in my presentations while meeting with new clients.

Stay healthy and keep investing.

For all your investment needs, call WealthMaster.in Team @ +91-9810582989 or email at wealthmaster.in@gmail.com

Disclaimers:

The views expressed in the blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer or company.

Insurance is the subject matter of solicitation.

Mutual Funds investments are subject to market risks. Please read the offer documents carefully before investing.

Read More

How to Earn More and Save Money

We'll are going through tough times and this tough time, especially from the last 3-4 months, have given us a good lesson. At least, I've learned a lot during this bad phase. I'm sharing such thoughts with all of you. It will help you also.

1. First of all, put this idea in your mind that you need to cut your expenses. If you think, all your expenses are fixed, give them a second thought.

2. Avoid using credit card especially when you're out for shopping. Make a list of items you need before you go to mall and then take only those items which are in your list. Avoid attractive schemes like "Buy 1 Get 1 Free". You don't need that even 1.

3. Make all your payments through Net Banking or through debit card. This will always show you current bank balance and will remind you your other fixed expenses.

4. Have a conversation with customer support department of your mobile phone and landline phone service provider. Ask them some good phone plan as per your usage or better ask for toppings on your bill plan. That will reduce your call rates and will save some money every month. If you're just 2-3 members at home, you may don't need landline phone with rent. Instead, figure out alternate prepaid mobile connection with good validity.

5. Avoid loans on your credit card or personal loans. The interest rates are one of the highest in India. Save some money in bank every month and take the item when you meet your target.

6. Have a visit to your local general store. He may give you good discount now as compared to your "savings" and "points" of your favorite shopping mall.

7. Looking for some new mobile phone or some other electronic item. Try to get near Diwali or Christmas festival. Many companies' offers discount near festival season.

8. Going to office on your car everyday. Talk to your colleagues and friends and plan for car pool. You'll save on petrol and car maintenance charges.

9. You might need to look out your favourite channels list and discuss with your dish tv operator or look out their web sites for some good plans. You'll save some money every month there also.

10. Last but not the least; try to do some part time business along with your current job or business which will give you handsome money every month. That money will help you in difficult times. I'll explain this point in detail after few days.

Read More