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Power of systematic investment plan

Posted By On 6/14/2008 10:10:00 PM
1. Can one imagine that a sum of Rs Rs. 3000 invested per month for 17 years @10% would grow to Rs. 16 lacs and the same can be used for funding of your children education or even buying your dream home.

2. There are many great aspects to this subject of  Systematic Investment Plan (SIP) , which we will review carefully so that you may get the most from it and to get started one must understand that it is a method of investing a fixed sum, on a regular basis, in a mutual fund scheme or one can call it as a regular saving schemes like a recurring deposit in the post office.

3. In the beginning of this article, we went over the basics. Now, we will look at this topic a little more in-depth and we will dwell on the strategy to buy low, sell high a Just four words which sums up a winning strategy in the stock market. However one must remember that timing in the market is not easy and even experts have difficulty in achieveing the same.

4. Thus one must not aim at achieving the best in stock market and instead one can invest regularly every month and is thus able to get the best average price and is thus able to get the best out of an opportunity that could be tough to predict in advance.

5. Over time, you will begin to understand how these concepts really come together if you choose to venture into this subject further. and thus, for a small investor, there is a huge risk in making large investments at one time. An SIP actually reduces this risk, by spreading the investments over a longer period of time, at various levels of the market.

6. I can sum up the investment in systematic investment plan by considering the following points:

(a) Ascertain your investment horizon.
(b) Decide on the periodicity of investment.
(c) Determine the amount you can comfortably invest in a SIP periodically.
(d) Pick a scheme according to your risk profile.
(e) Invest for long term.

7. Make your decision for investment now and choose the ideal investment per month and take the power of time to work in your favour to grow your investments.

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