Category Archives: Mutual Fund

How to Invest in Mutual Funds online?

Mutual funds provide the opportunity for any individual or an investor to gain wealth in a systematic manner and within the set time frame. Investors can select between low risk and the high-risk funds that offer wealth accordingly. For instance, an investor looking for a long-term investment can opt for low-risk funds and vice versa.

If you intend to invest in mutual funds, you no longer have to visit the branches and fill up a bunch of papers to open an account and start trading. The evolution of the Internet has made it possible for the management houses to offer online methodology through which you can register, select the preferred for the scheme, and begin the investment procedure.

The first phase

The first phase requires you to begin with Know Your Customer (KYC) requirement. It is necessary for an individual or an investor to fulfill the KYC norms to start investing in mutual funds. Fulfilling the need includes submission of address proof, a photograph, and identity proof. In a few situations, it is also necessary for the investor to confirm the physical presence through in-person verification. The in-person verification requires the individual to be present in a specific slot and make himself/herself available for verification through the video call.

eKYC

Apart from this, several fund houses such as Quantum, Birla Sun Life, etc. have begun to provide the online eKYC system to ease the process of registering an investor. Simply clicking the link available on the website and following the steps will be helpful for an individual to register and begin investing in mutual funds.

Alternative methods

Apart from the procedures mentioned above, one can also visit CAMS KRA website, which is a KYC registration agency. Registration is a one-time procedure and centralized. It determines that the user does not have to register separately each time he/she chooses a different fund house to begin investing in mutual funds. It is essential to note that CAMS is not a registrar and a transfer agent. Karvy takes care of a few mutual funds. Therefore, it is necessary to check between the both and opt for an appropriate service depending on the choice. Although the steps of registering for eKYC differ slightly, the basic structure remains the same. It includes providing basic information such as name, date of birth, address, and mobile number. Users also require uploading documents such as the scanned copy of PAN card and address proof.

Video call

For investors who do not possess Aadhaar, the service provider will complete the registration by carrying out in-person verification. The individual should keep address proof and PAN card handy and display the same during the video call for confirmation.

Aadhaar based eKYC

Possession of Aadhaar will simplify the registration process. Entering the Aadhaar number and authenticating it using the one-time password will fill the basic details of the individual from the UIDAI database. Completing the verification in such a manner that does not require the individual to go through the in-person verification procedure.

If the user does not submit proof of PAN card, then it is possible for him or her to invest only INR 50,000/- per annum. In case the user updates the profile with PAN card, he/she can increase the amount of investment at any time.

Final step

The user can visit the required website of the fund house and create an account. It is necessary to keep the cell phone and checkbook handy to verify the account through OTP. Upon confirmation, the user can log in, select the mutual fund scheme, and submit the request. You can also check Online SBI for more info on the same

Exchange Trade Funds

Exchange traded funds (ETF’s) are investment products have come into prominence during the past decade.  ETF’s are liquid market products that replicate the movement of a basket of assets or an individual asset such as an index, commodity, currency or market sector.  An ETF can hold assets such as stocks, commodities, currencies or bonds and are actively traded throughout a trading session like a stock.

Exchange Trade Funds

Trading ETF’s differ from mutual funds in that they provide intra-day liquidity and the ability to allow investors to exit at the current live price as opposed to an end of day price.  ETFs are considered attractive as investments because of their low costs, and stock-like features.

Sector ETF’s

ETF’s are broad based instruments and have allowed investors to focus on different sectors of the equity markets.  Generally, a sector ETF’s hold baskets of stocks that participate in similar businesses.  There are numerous ETF’s available for each of the major stocks sector categories.

A common classification breaks the market into 10 different sectors. Investors consider some of the sectors defensive and many of the sectors cyclical. Stocks sectors are helpful comparison tools, as they assist in the process of asset allocation and diversification.

Defensive stocks

Defensive stocks include utilities and consumer staples.  Utilities provide electricity and natural gas which are products that are needed by consumers despite current economic activity.

Cyclical stocks

Cyclical stocks fluctuated based on a variety of market conditions.  A list of cyclical sectors include:

  • Consumer Discretionary – These types of stocks sell items that consumers purchase beyond items that would be considered necessary or staples.
  • Energy – This sector focuses on stocks that produce, refine service and market energy products.
  • Industrials – This sector focuses on companies that build and manufacture.
  • Financials – This sector follow the major financial institutions along with regional banks.
  • Information Technology – This sector focuses on large cap technology companies that focus on business activity as well as individual consumers.
  • Materials – have experienced solid volatility, as European uncertainties continue to cap this equity sectors upside.
  • Telecomm – This sector has been performing well and seems to be driven by the increasing global demand for mobile devices.
  • Healthcare – Healthcare generates revenue from increasing population and regulations that favor the industry.

Currency and Commodity ETFs

There are ETF on specific assets such as currencies, commodities, and even volatility.  A currency ETF would hold spot currency pairs as well as futures on currency pairs to track the direction of a currency pair.  A commodity ETF such as a Gold ETF, would hold gold futures and gold spot transaction and track the direction of a gold benchmark.

Exchage Trade Funds

Summary

Exchange Traded Funds are excellent investment vehicles to use to initiate risk in a specific sector as well as a robust way to generate a diversified portfolio using ETF to track specific assets.  An ETF is liquid and trades like a stock allowing you to enter and exit intra-day. Sector ETF’s allow investors to have exposure across a broad range of businesses, and allow traders to hedge exposure to individual stocks.

How to Invest in Mutual Funds in India ?

Mutual funds are one of the profitable form of investment in India. There are several government and private banks which offer profitable mutual fund services. These services of mutual funds deliver a greater value of return for all of the mutual fund investors. People prefer mutual funds because the agencies offer such mutual fund schemes in India, which avoids risk for a lesser period of time. And also delivers a net profit value at the end of the financial year.

Tips to Invest in Mutual Funds in India

People or investors prefer mutual funds than share investment, because they think the mutual funds are a safer form of investment than the rest. There are very few kinds of people in this economic world that they invest their money in some sort of insurance policy.

1) Contributing in a Right Asset

Mutual funds are mainly an investment which revolves around asset allocation. The asset allocation matters the most in the mutual fund. An investor on whose behalf the investment is taking place need to understand their asset value. Moreover, mutual fund investment in India requires a risk free mindset. It is obvious to face some parts of risk in the mutual fund investment, but it won’t be a problem for those who makes a right selection of asset allocation.

2) Suitable Selection of the Mutual Fund

There are several types of mutual funds which are available in the mutual fund investments. Perhaps, choosing a right kind of mutual funds makes one’s easy in terms of future expectations. The mutual fund investment come with a part of risk factor in the financial aspects. Therefore, an investor need to choose a mutual fund which delivers their expected results in a certain period of time.

3) Mutual fund types

When it comes to mutual funds, people prefer such type of mutual funds, which deliver a lesser amount of risk in terms of their investment. Therefore, it would be advisable for the investors to choose a balanced mutual fund, which deliver a fixed income rates along with less risk factors. Choosing a balanced mutual funding option is one of the basic levels of investment for people with beginners experience.

4) Comparing different types of Mutual Funds

It is a first for beginners that they need to find a suitable mutual fund investment. Choosing a suitable mutual fund investment is one of the major decisions which need comparisons amongst the rest of the mutual fund options. Therefore, before finalizing the decision over mutual funds the investor need to cast an open range of coverage for their investment return.

5) Keep yourself updated

Some investors maintain a laid back attitude towards their investment planning. Especially, when it comes to mutual funds people depend more upon their mutual fund advisors. A mutual fund advisor needs to be of a sound person who can carry forward all the mutual decisions over the mutual fund investments. Therefore, an investor need to be more active and updated towards their investment activities.

6) Hiring a knowledgeable Mutual Fund Advisor

A knowledgeable mutual fund advisor is a person who handles all sorts of mutual fund investment. There are some individuals who go for such mutual fund decisions which deliver a higher profit rate with lesser risk factors. And for that sake those investors hire a mutual fund advisor to avoid such decisions over risk factors which can ultimately affect their investment managements.

Major features covered by Mutual Funds in India

There are several major beneficial features of mutual funds in India. And they are as follows,

1) Flexibility

The mutual funds are famous for their flexible ways of handling and management of investment. For example, if a person received a lump sum amount of money or cash, then at that point of time it would be better for him to go to banks or others. But it would even better for him to go for mutual funds, in terms of its profit and flexibility. A person invested in mutual funds can withdraw his share of investment at any point of time without any occurrence of any kind of loss or risk.

2) Professional Handling

As mentioned above mutual fund management provides advisors who holds overall knowledge about mutual fund structures. Each person requires a different type of mutual fund planning. And for that sake each professional advisor design a mutual fund plan which supports and fulfill the financial picture of the investor.

At the end the bottom line is that in India people or individuals hesitate in investing such type of mutual funds, and that is because of their knowledge about the mutual funds. There is a possibility that people are afraid to go forward with these types of investments because of risk factors. But these risk factors levied only if the investor made a wrong selection of the mutual fund for their investment expectations.

How to Invest in SIP Online ?

Do you have plans to start a SIP(Systematic Investment Plan) in an equity mutual fund scheme, but are procrastinating due to long documentation procedure? If yes, then this article is for you. You don’t have to go through tedious documentation for an SIP anymore. You can start an SIP online from the comfort of your home or office.

Steps to Invest in SIP Online

The first and foremost thing you have to do before starting an SIP is completing the Know Your Customer (KYC) requirement. KYC is a mandatory to invest in mutual funds. For this you will have to submit an identity proof, address proof as well as a photograph. You also need to confirm your physical existence through an IPV (In-Person Verification). All these can be completed electronically through eKYC. Most of the fund houses such as Quantum, Birla Sun Life, etc have started this facility through their website itself. You just have to click on the eKYC link and then follow the steps.

The steps to be followed for an eKYC differ slightly for different fund houses. However, broadly speaking, the steps remain more or less the same.

  • Basic Information: Go to the website of your preferred fund house and click on the eKYC link. Then put in your required personal information like name, date of birth, mobile number, address, etc.
  • Upload Documents: Now you will have to upload a scanned copy of your Pan Card and Address Proof.
  • Video Call: For the IPV (In-Person Verification) requirement, you will have to select a suitable time slot at which you can confirm your physical existence through a video call. Remember to keep your original PAN card as well as address proof handy at the time of the video call as you would be asked to show them during the call.

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Aadhar based eKYC

If you have an Aadhar card, the above process would be even simpler. You just have to enter your AADHAR number and authenticate it with an OTP (One-Time Password) which would be sent by UIDAI. This will pre-populate the form with your basic details which is available in the UIDAI database. Doing this will also eliminate the need of an IPV through a video call.

There is no limit to investment in SIP if you have completed PAN Based eKYC. With Aadhaar based eKYC there is a statutory limitation. You won’t be allowed to invest more than Rs 50,000 in the present financial year. However, as soon as you submit your PAN details, the limit can be enhanced.

Also Read : 5 Best ELSS Funds to Invest

Starting your SIP

Now you can start your SIP. Visit the website of the fund house you wish to invest with and go to the registration link for a new account. It will ask you to fill a simple form for creating an online transaction account with the fund house. Do keep your cheque book and mobile phone handy as it would ask you for your account details and might need verification through an OTP.

Now that your account is created, simply login to your account.  Select the mutual fund scheme and choose an SIP date and then submit your request.  Your SIP would start. This was the procedure on how to invest in an SIP online.  Isn’t the process simple? Do let us know your queries via the comments section below.

How much should I Invest in SIP per month?

First let’s get to know what a SIP is. SIP stands for Systematic Investment Plan. Under this plan an investor invests a small pre defined amount of money in mutual funds on monthly basis. The purpose of such an investment is to accumulate long term wealth. There are different types of SIP plans available in the financial market. Now, the question arises, how much you need to invest through a SIP to get the desired amount to fulfill your dreams. There are certain factors involved like your monthly income, the amount of money you wish to accumulate in the long term, inflation etc. So, one needs to first ask himself how much should I invest in SIP per month and then invest accordingly.

How much should I Invest in SIP per month

How much to Invest through SIP per month ?

Here are 5 key points which will help you decide your monthly SIP amount.

1) How much Money you Exactly Need to Achieve your Goals

Let’s say you need a certain amount for a world tour or for that matter an amount that can help you retire early. You need to think exactly how much you would need at that point of time. Do not decide a random figure in your mind like you need 5 lakhs for a US trip. Consider the actual expenses that you would have to incur for that particular trip. You would also have to consider inflation of 6-8% per year as what costs Rs 10 today would not cost the same after say 10 years.

Also Read : 10 Best SIP Plans to Invest

2) Be Realistic in your Goals

It is important to be practical and realistic while deciding upon your ultimate financial goal. It isn’t practical to dream of having 2 crores in a span of 2 years. Isn’t it? So, think practically on how much amount you would require and would be able to manage to accumulate through investments.

3) Decide a Proper Time Frame

Again, one has to be realistic in terms of the time when one actually wants to fulfill the goal which he or she is trying to achieve by accumulating wealth. For example, someone who is earning Rs 30,000 per month cannot get returns of 10 lakhs in 3 years. But can surely get to that amount in 10 years.  So, thinking with the right perspective can help one decide upon how much and when exactly the financial goal can be achieved.

Also See : 5 Best ELSS Funds to Invest

4) How much can you Invest Monthly

Even though two people might earn the same, there would be a difference in the amount of money they can spare for investing. It depends upon once expenses and liabilities like repayment of loans, rent, lifestyle and many other factors. So, one should consider factors like monthly earnings, expenses, liabilities etc and then see how much they can exactly spare for investing to accumulate wealth in the long term.

5) SIP Investment should not be more than 20% of Monthly Income

Financial experts suggest that as a thumb rule, one should not invest more than 20% of the monthly in hand salary in SIP. So, if someone is earning Rs 50,000 per month then his SIP investments should not be more than Rs 10,000 per month.

There are many different kinds of formulas available online that claim to suggest you the right amount for investment in SIP. Let’s be honest here. A formula might work well for one but not for the other. So, there is no hard and fast rule or an exact formula to decide how much you should be exactly investing through a SIP. One should consider the above points practically and be realistic about the amount they want as return of investment and in what time they expect to get that amount. Also, one needs to consider their financial capability to invest and then decide exactly how much they would invest in a SIP.

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5 Best ELSS Funds to Invest in 2017-18

Best ELSS Funds : For any investor, one of the most important objectives is, tax saving along with wealth accumulation. There are many investment options for tax savings as well as long term wealth accumulation in equity products. Out of all these options ELSS (Equity Linked Savings Scheme) is one of the best tax saving options that we have currently in the financial market. ELSS Tax saving mutual funds comes with the lowest lock in period among all the tax saving options that are available under Section 80C. The lock in period for ELSS tax saving mutual fund is 3 years. In comparison the lock in period for PPF is 15 years, for Tax saving Bank Fixed Deposit’s is 5 years and for National Saving Certificate’s is 5 years.

5 Best ELSS Funds to Invest in 2017-18

ELSS falls under the EEE tax rule i.e. Exempt-Exempt-Exempt. During the Contribution-Accumulation-Withdrawal phases, no taxes are applicable. The Public Provident Fund and the Employee Provident Fund are the only other investment options that enjoy the EEE tax rule. Although there is no upper limit for investment in ELSS, the maximum tax benefit is limited to Rs 1.5 lakhs under Section 80C. By investing in ELSS funds you have a better chance to get better inflation adjusted returns. It should be noted that higher returns may generally associate with higher risk profile.

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Top 5 ELSS Funds to Invest in 2017-18

There are above 100 ELSS Mutual Fund Schemes available in the financial market. The average category returns for the last 5 years for ELSS Mutual Funds has been around 12%. In this post we will let you know which are the top performing Tax saving mutual funds along with their lump sum investment returns. So here is our list of 5 best ELSS funds.

1) DSP Blackrock Tax Saver Fund

This fund has invested primarily in stocks that belong to the Oil & Gas¸ Banking and Auto sectors. 20% of this fund’s corpus has been invested in Mid-cap Company Stocks while 70% of it has been invested into large cap stocks.

This fund has generated returns of 20.6% during the last 5 year and 15.6% during the last 10 year period making it one of the best elss funds 2017 to invest in.

Also Read : How much to Invest in SIP per month ?

2) Birla Sunlife Tax Plan

Auto, Banking and Pharmaceuticals are the top sectors chosen by this ELSS. Around 57% of its fund corpus has been allocated to mid & small cap stocks which makes this fund a typical Mid-cap oriented fund. The returns generated by this fund during last 5 years is 19% and 12% during the last 10 years. This is also one of the best elss to invest in.

3) Birla Sun life Tax Relief ’96 

Primarily, this fund has chosen the sectors of Auto, Banking & Pharmaceuticals. The portfolio has around 57% allocation to Mid & Small cap stocks. A multi-cap strategy is followed by this fund. This fund has generated returns of 20.1% and 12.6% during last 5 & 10 years respectively. This is again one of the best elss in 2017.

4) Franklin India Taxshield Fund

Auto, Banking and Technology are the top sectors chosen by this fund. We can consider this fund as a typical large cap oriented fund based on its portfolio allocation as around 80% of the fund corpus is in Large Cap Stocks. For the last many years, this fund has been one of the most consistent ELSS fund which makes it the one of the best elss sip for 2017.

5) Axis Long Term Equity Fund

In this fund’s portfolio; Banking, Auto and Engineering are the top 3 sectors. Although this fund’s performance was not quite up to the mark in the financial year 2016-17, it may be too early to take out this fund from the top ELSS Funds list.  Who knows, giving it more time can make this one of the best elss scheme to invest in 2017. In the past 5 years, this fund has been a very consistent performer.

10 Best SIP Plans to Invest in 2017

Best SIP Plans 2017 : A Systematic Investment Plan, often referred to as SIP is a convenient and smart way of investing money in mutual funds. Using a SIP one can invest a certain pre-defined amount at regular intervals. A SIP is a planned way of investing money to create wealth for the future. There are a number of SIPs with which one can start investing with. One can get spoilt for choice while selecting a SIP. To make things easy for you, we are compiling a list of 10 best sip plans 2017.

Top 10 Best SIP Plans to Invest in 2017

Top 10 Best SIP Plans to Invest in 2017

1) Birla Sun Life Frontline Equity Fund

With this sip, one can expect a long term growth of investments.  This plan has done very well in the past as well and provided 18% annualized returns in the last 5 years. It has a CRISIL Rank of 1. It is one of the best large cap sip.

2) ICICI Pru Top 100 Mutual Fund

One can generate a long term capital appreciation through predominant investment i.e. up to 95% in equities and remaining in debt and money market instruments. About the past performance, it has provided 17% annualized returns in last 5 years. Its CRISIL Rank is 2. This is a large cap and one of the best sip plans for 3 years and above term.

Also See : 5 Best ELSS Funds to Invest in 2017-18

3) ICICI Pru Focused Blue Chip Fund

This fund has provided 16.3% annualized returns in the last 5 years. This is also a large cap fund. It has a CRISIL rank of 3. This is one of the best sip plans for 5 years and above term.

4) Franklin India Smaller Companies Fund

This is a Mid Cap Fund to generate long term capital appreciation.  The SIP invests up to 75% in smaller capitalization companies.  It has given 29% annual return in the last 5 years. This is one of the best mid cap fund one can invest in.

Also Read : How much Should you Invest in SIP per month ?

5) DSP BlackRock Micro Cap Fund

This is also a mid cap fund with which one can get long term appreciation by investing in. This fund has provided 28% annualized returns in the last 5 years. Talking about its performance, if one would have invested Rs 1000 as SIP, then the total investment would have been Rs 60,000 in 5 years and the investment value would have been Rs  1,42,000 by now. For people looking for investment for a short period of, this is one of the best SIP plans.

6) Mirae Emerging Blue Chip Fund

This is again a mid/small cap fund which has provided 28% annualized returns in the last 5 years. Coming to its performance, if one would have invested Rs 1000 as SIP, then the total investment would have been Rs 60,000 in 5 years and the investment value would have been Rs  1,32,000 by now. It has a CRISIL rank of 1 and is one of the best sip plans to invest in 2017 for a longer period like 10 years.

7) Kotak Select Focus Fund

This is a diversified mid cap fund. It has given 19.6% returns even in the short period of 1 year, making it the best sip plans for 1 year. Its CRISIL rank is at rank 1. By investing Rs 1000 per month for the period of last 5 years, one would have made a total investment of Rs 60,000 and the total invest value would have been close to Rs  1,04,000 by now.

8) HDFC Balanced Fund

This is a hybrid fund which aims to provide capital appreciation from a combined portfolio of debt instruments and equity. It has provided annualized returns of 17% in the last 5 years. If you would have invested Rs 1000 as SIP, then the total investment would have been Rs 60,000 in 5 years and the investment value would have been Rs  97,000 by now. This is undoubtedly the best sip plans in HDFC.

9) ICICI Balanced Mutual Fund

This is again a hybrid fund which has provided 17.8% annualized returns in the last 5 years. When it comes to the performance, if one would have invested Rs 1000 as SIP, then the total investment would have been Rs 60,000 in 5 years and the investment value would have been Rs  96,400 by now. Its CRISIL rank is at Rank 3. To invest in a balanced fund category this is one of the sip plans for the year 2017.

10) AEGON Life SIP Plan

This plan is great to secure your child’s future. It offers 3 funds that you can choose from –Secure Fund, Blue Chip Equity Fund and Debt Fund. The fund charges in this plan are as low as 1.00%. With this plan you get complete financial protection for your child’s future. The fund not only provides the obvious benefits on maturity but also gives great support to your family when you are not around. This is one of the best sip plans for child.

Systematic Investment Plan : Working & Benefits

Systematic Investment Plan (SIP) : It is very important that you save some part of your earnings in order to secure your future. Earnings of each individual differs and so should the savings amount. It is advisable to save at least 30% of your earnings each month. You must divide your savings into different schemes rather than saving at one single place. When we talk about an investment, a new name has been heard in recent years i.e., Systematic Investment Plan. A lot of people want to know more about what actually is a Systematic Investment Plan, how does it work and what are its benefits. Today, we will answer all these questions related to SIP.

Systematic Investment Plan (SIP)

Systematic Investment Plan (SIP)

Let us first know more about the systematic investment plan, they way it works and the benefits of enrolling in a systematic investment plan.

What is a Systematic Investment Plan ?

A Systematic Investment Plan (SIP) is a smart and hassle free way of investing money in mutual funds. SIP helps you to invest a pre-determined amount at a regular interval, may it be weekly, monthly, quarterly, etc. A Systematic Investment Plan is a considered to be a planned approach towards investments which helps you get disciplined with the habit of saving and building wealth for a better future.

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How does SIP work ?

Systematic Investment Plan (SIP) works on the principle of making regular investments. It is quite similar to a recurring deposit where you save in a small amount every month. SIP allows you to invest your money in a Mutual Fund by making smaller investments periodically (monthly or quarterly) instead of a heavy one-time investment. Example :- By investing through SIP you can pay 10 periodic investments of Rs 500 each instead of a one-time investment of Rs 5,000 in a Mutual Fund. In this way you can easily invest in a MF without making any changes in your other financial liabilities. The Benefits of SIP given below will help you get a better understanding of working of SIPs through the concept of rupee cost averaging and the power of compounding.

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With the introduction of SIP, mutual funds are now within the reach of an average person as it allows to invest as low as Rs 500 or Rs 1,000 on a regular basis instead of making a big one-time investment.

Systematic Investment Plan may not seem quite appealing at first, but as the time goes on it enables investors to get into the habit of saving. If you carry on your SIP for a longer term it can add up and give quite high returns. If we take an Examle, A monthly SIP of Rs 1000 at the rate of 9% would return Rs 6.69 lakh in 10 years, Rs 17.83 lakh in a period of 30 years and Rs 44.20 lakh in period of 40 years.

Benefits of Systematic Investment Plan (SIP)

Not only SIPs can return you a high return in a longer period, it also has some benefits which you must like to know. Let us tell you the advantages or benefits of Systematic Investment Plan.

1) Helps Maintain Discipline 

The main rule to get financially strong in a longer period is to stay focused, invest regularly and maintain discipline while making investments. A small amount of savings every month will not affect your finances. With the small amount of savings every month it would be easier for you to save, rather than saving large sum for investing in one go.

2) Power of Compounding

To be a successful investor you need to start early. Since all mode of investment and returns are based on the power of compounding, an investor who starts out early in life can earn a lot higher returns than the one starting out late even with a bit higher investment. Since a SIP do not need a large amount of investment to be made and an individual can start investing with a low amount every month depending on the financial condition, it allows them to start their investment a lot early in life.

Let us take an Example of Mr.A and Mr.B to understand how does the power of compounding helps the investor using a systematic investment approach. Mr. A started investing in a SIP with a sum of Rs. 1000 when he was 30 years old. Till the time Mr. A reaches 50 years of age, he would have invested Rs. 24 Lakhs if the money grew with an average rate of 7% p.a. Let us now consider that Mr. B starts earlier in life than Mr. A and started investing the same amount of Rs. 1000 since he was 20 years old. If the investment of Mr. B grows at the same rate of 7% per annum would give a return of Rs. 36 Lakhs by the time he is 50 years old. So by our example we found that Mr. A and Mr. B invested same amount every month, however one starting out early in life has made a tremendous gain compared to the one starting out late.

3) Rupee Cost Averaging

Rupee cost averaging works out really well for investments in equities. However, while investing the same amount in a mutual fund at regular intervals, you tend to buy more units when the price is lower. In this way you would reduce your average cost per share (or per unit) in a longer period. This strategy to reduce your average cost per share (or per unit) is called ‘rupee cost averaging’. If you make a sensible and long-term investment, rupee cost averaging can smoothen out the ups and downs of the market and will help reduce the risks of investing in volatile markets.

Individuals who invest through Systematic Investment Plans cope up easily with the highs and lows of the market. With an investment in SIP, your average investment cost comes down.

4) Convenience

SIP is a known to be a very convenient way of investing money. You just need to submit cheques with the filled up enrolment form. The cheques will be deposited on the requested date by the mutual fund and the units will be credited your account. You can also check SIP related details buy the desired units of SIP online. You will also be getting the confirmation for your transactions.

5) Other Benefits

Some other benefits of SIPs are that there no entry or exit loads on your investment in SIP. One more important advantage of SIP is that all the Capital gains,wherever applicable are taxed on a first-in, first-out basis.