Is the question of whether you should go for a systematic investment plan aka SIP or go for a one time bulk investment bugging your mind? Read and see for yourself what is best for you.
In comments and in emails I get many questions from readers where they want to know if they should do a systematic investment plan aka SIP or go for a one time bulk investment.
So today I will give you 3 more good reasons for investing through SIPs
1. Light on Wallet
I am sure there will very few who would argue on this. Investing 10,000 per month will not hurt your wallet as much as one time investment of 100,000.
2. You do not fall prey to Timing the market
Time and again I always say this “It’s not important to time the market (and no one can) but more important is the time in the market” and if you start investing in SIP you by default make sure that you are a long term investor not looking to time the market. This also has added advantage of avoiding crappy trading tips from your broker.
3. Compounding
If you invest each month you are not only compounding your investment but also your profits and the sooner you start working on your investment the better. See the example below.
Let us say that you invest 1,000 Rs each month. For the sake of calculation we consider interest rate of 10% per annum in equity where as SIP returns for last 3 years are higher than 15%. Let us see what we stand at.
After 20 Years we are at Rs 768,030.
After 30 Years we are at Rs 2,183,321.
After 40 Years we are at Rs 5,854,221.
And you can see that it almost triples every 10 years.
Over to you
So have you done your SIP yet? Share your SIP investment figures in comments for others to learn.
Investing has changed in the last 5 years. It has not changed in terms of process – fundamental analysis is still the same it was 5, 10, 15, 50 years ago. What has changed is the access to information. The Web has provided investors with a whole new world of information that can be used when making investment decisions.
Hi Shabbir, I am planning to invest Rs1000.00 per month. it should be beneficial for me for the tax. Can you pls suggest some investment plans?
Currently according to me it should be in ELSS funds.
Hi Shabbir,
Thanks for the advise. I wll look for some performing Energy funds and add to the list. I was thinking of going for the Monthy Income Schemes in Mutual Fund. Are they really good. The amount that comes from MIP will invest as a SIP for few funds if pissible. What do you suggest. I am really sorry asking too many questions to you.
Regards,
Chinmaya.
Chinmaya, I am not fond of monthly income plans and so have not invested anything personally among them and so you have test how things pan out. Also make sure you assess the tax implications on monthly income plans.
I always like too many questions because that means you are trying to study things before jumping into market and that is the main mission of this blog.
Hi Shabbir,
Thanks for looknig into the details and your valuable time.
As said earlier below is in my bucket as of now. As you said quite a lot of large caps.
Equity: Large Cap
=================
Franklin India Bluechip – Growth
DSP BlackRock Top 100 Equity Fund – Growth
Equity: Large & Mid Cap
=======================
HDFC Top 200 – Growth
Reliance Vision – Growth
Equity: Mid & Small Cap
=======================
Sundaram BNP Paribas Select Midcap – Growth
Reliance Growth – Growth
I am planning to buy the below funds and planning to go for a SIP of Rs.1000 every month for all these funds. PIcked the below ones based on few of ur blogs and on the returns as seen in valueresearchonline.
Do let me know if the ones I am going to buy are worth buying or not? Also please suggest if I should invest in any other category of funds for better diversification?
Below are the ones I am planning to buy with the growth option.
Equity: Mid & Small Cap
=======================
Birla Sun Life mid cap fund
Equity: Large & Mid Cap
=======================
Fidelity Equity
Equity: Infrastructure
======================
Canara Robeco Infrastructure Fund
ICICI Prudential Infrastructure Fund
Thanks for your advice.
Regards,
Chinmaya.
If you want to diversify you should add some commodity related funds like Energy funds.
Also about HDFC Top 200 and Reliance Vision are Large cap funds for me.
Again Reliance growth is by no means a mid to small cap fund because it invests 80% in large to midcap companies.
Hi Shabbir,
As of now I have the below MFs in my port folio. Please advise if I need to add some more. My goal is long term appreciation or if I get 25% growth over a period of 3 years I will sell them. Planning to do a SIP of Rs.1000 into these funds every month. Do let me know some more funds that are really good keeping an eye for long term. Do I need to remove any from my portfolio, let me know that as wel.
[SN017] Sundaram BNP Paribas Select Midcap – Growth
[ZI006] HDFC Equity Fund – Growth
[IT001] HDFC Top 200 – Growth
[KP001] Franklin India Bluechip – Growth
[DS020] DSP BlackRock Top 100 Equity Fund – Growth
[RC001] Reliance Vision – Growth
[RC009] Reliance Growth – Growth
Thanks in advance for your help.
Waiting for your response.
Regards,
Chinmaya.
Chinmaya, the list looks really good but I see you have most of the large cap funds and it does not make much of a sense to diversify just based on the fund houses and still invest in the same category funds.
Dear Sir,
AS you Wrote about SIP, It is cent percent true. for Other reders I write down my results.
Reliance diesified power sector fund – div
Started : Aug 2008
Cycle : Monthly
Amount: 2000 Rs./month
Investd :52000 RS.
Current Value: 71335 Rs.
Relianc natural resorce fund- growth
Started : Feb 2008
Cycle : Monthly
Amount: 2000 Rs./month
Investd :60000 RS.
Current Value: 74243 Rs.
Tata infrastructure fund – div
Started : Jan 2008
Cycle : Monthly
Amount: 2000 Rs./month
Investd :64000 RS.
Current Value: 86072 Rs.
Regards,
Anup R. Ambuja.
Hi Shabbir,
Thank you so much for your reply. I have another small question, the portfolio of the ICICI pru discovery fund contains more mid-cap. Is it a good option to choose a mid-cap fund for a longer run (say 5 years) ?
Chandra, Have you seen http://shabbir.in/best-midcap-funds/
Hi Shabbir,
Thanks a lot for your suggestions. I wish to enter into Equity funnds and I am planning to do a Systematic Investment Plan of Rs.1000 pm on ICICI Pru Discovery (G) fund. Is that a good option, if not advice me the other good funds in Equity.
Thanks in advance.
Chandra, Depends on your investment objective and so see the performance of the fund and see if it is inline with what you want to get from your investment. It has given 82% return in last 52 weeks.
Thank you for your valuable guidance..
Regards,
Harsh Patel
The pleasure is all mine.
Hi,
My papa is of 52 years of age is thinking of investing in ulip for 50 lacs cover and investment.
But as read in your post i am recommending term insurance & mutual fund combination.
For Term insurance
Plan:Birla sun life high networth plan
Insurance:50 lacs
Term: 18 yeras
Basic premium: 47600rs.
For Mutual Fund
I am thinking of going for 2 lac rs in each of the fund listed below for at least 20 years.I and my brother earns other than my father. My dad has high risk capacity because we have sound background. I am thinking of going for these mutual funds suggest me if i should change:
1 HDFC TOP 200 FUND ::: Fund manager : Prashant Jain
2 DSP TOP 100 FUND ::: Fund manager : Apporva shah
3 Principal Large Cap fund ::: Fund manager:Rajat Jain
I am assuming a 15% CAGR return over 20 yeras.
After three yeras the premium of term insurance will be taken from the mutual fund every year.
Now my question is
1. I would like to know better fund type(i.e. largecap,midcap..) for 20 years of investment…
2. Should i include any midcap or smallcap fund and remove any of the above…?
3. should i go for canara robeco infrasructure fund in place of pricipal large cap fund….?
Your guidence will help me..
Thank you,
Harsh Patel
Harsh, You have selected good funds but all large cap fund would not help and Add one or two other types of funds and specially midcap. Sundaram and Birla Mid cap are my personal favorite.
Yes Canara Infra fund should be better choice to add as well.
What are 5 best options for SIP investment plan and confirn benfit details Which select SIP investment plan pls guide.
This is a really good blog and your articles are very good.
Thank You .
Mahendra
i completely agree with share tips
this blog is nice and good. i hope it continues its efforts to help traders and investors
This is a really good blog and your articles are very good.
Thank You.
Regards,
hi Shabbir
I have an investment in 3 Ulip plan
1. ICICI Life time super- 24k pa
2. LIC money back-15k pa
3. Birla sun -7k pa
all these has completed the perid of 3 year
shall I quit/stay investing/ or stop investing in these and withdraw once NAV goes up and invest that amount in MFs
Pl do reply
Thnaks in advance
Best Regards
Smita
Smita, I do not track Life Insurance Plans but my personal preference is no insurance.
Very cool article.
thank you for sharing this post with us.
keep going on.
I read your views and details of investment .
Its realy works.
What are 5 best options for long term investment.
Shabbir, i was talking about the GILT(Gold) funds and not about gift funds 🙂
Shafat, yes its a good time to get into those ones because Gold has come down recently
Hi Shabbir
I want to ask you what are the best Gilt funds around? Is it wise to go for these or should one stick to Equity?
Thanks for your help
Shafat
Shafat, I do not track gift funds and so will not be able to comment on them
what is the most profitable mutual fund?
Its all relative and for me something at 10% may be profitable but for you it may not be even 100%