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Hello friends its festive time !!! I trust like me each one of you would have longed for the second half of the calendar year to welcome majestic fiestas.   Festivals change the environment completely it brings lot of spiritual positivity within ourselves. In such occasions we clean and decorate our houses to give that marvelous festive look. We also spend at shopping centers for some festive apparels for our near & dear ones. Even our markets are full of rush specially the sweet shops and most of us end up buying those enticing sweets . Overall we spend a lot not even thinking about tomorrow,  but then questions continues to hunt us when will I start savings to continue my lifestyle in a similar manner ???.

Every month I tell myself “ OMG  lots of expenses this month  I will surely start savings from next month but the next month never comes this must be a similar scenario with each one of us,  isn’t it ?.

Michael Caine has rightly said   “Save your money you are going to need twice as much on your old age as you think “

Individuals have different objectives for savings letz see some of them below :

Let us all adopt the mantra of Warren Buffet


The money kept in the valet doesn’t multiply on its own we have to give our money a job ,for that you need to invest .The next question that comes to our mind  on savings is :
  •      Where should I invest ?
  •     Whom should I consult ?
  •   I don’t have lots of savings every month will a small amount      be sufficient?.....Even I had all these questions in mind until I        heard about SIP !!!


Systematic Investment Plan or SIP as it commonly called is a smart and hassle free mode for investing money in mutual funds. SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.). A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future.

How to get Started
First, select the scheme, investment amount and the time frame. 

Next, approach a mutual fund distributor (Banks are also distributors) or the fund house. You can also invest through an online portal. 

So, you can either give post-dated cheques or opt for the auto debit/ ECS option. 

Remember, while you can start investing on any day of the month, you will have to pick a date for subsequent investments. That is, each mutual fund specifies dates for SIPs, like the first, seventh, tenth of each month.

Given below an an illustration which would help us to understand how an SIP works and how we can benefit even when the market fluctuates.

Mrs. Sharma is an housewife . She invests Rs. 10000/- every month in an SIP .The fund manager of the mutual fund company decides where to allocate the funds . If the NAV (Net asset value ) of the mutual fund is Rs. 10/- per unit then Mrs. Sharma  gets 1000 units( i.e 10000/10 )  in the month of Jan .

In the month of Feb she again invests 10000/- now the NAV of the fund is Rs. 9/- per unit so Mrs. Sharma gets 1111 units .

Please refer the investment chart for 12 months below :

At the end of the investment tenure here  12 months Mrs. Sharma is able to buy 12409 units by investing Rs. 120000/- she benefited of the Rupee cost average.
  •       Mrs. Sharma has an option to redeem the mutual fund or retain it     and redeem later whenever she requires fund.
  •     Flexibility in change in amount higher or lower is also allowed in     an SIP  as per the comfort level.
  •       Last but not the least she can continue or discontinue her SIPs         as and when required.

Benefits of SIP :
  •     Helps in cultivating investment habit.
  •    Develops the habit of regular savings.
  •    SIPs investments need not be very huge(can be as low as     Rs.500/-)
  •    Easy to build a corpus over a period of time.
  •    Easy liquidity can redeem or exit whenever required.
  •    Minimum risk involved.

So friends do invest in SIP to ...(S)leep (I)n (P)eace!!! 

1 comment:

  1. Money matters made easy! Your explanation in simple terms made the complex topic, easy to understand. Thank u for educating!