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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.