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LORD JESUS CHRIST SAYS

The thief comes only to steal and kill and destroy; I have come that they may have life, and have it to the full. “I am the good shepherd. The good shepherd lays down his life for the sheep.

26 Jul 2015

MAGIC OF SIP (MUTUAL FUND)

Hi  Friends, SIP- It is an expert field , Lets leave it to them. Management of the fund by the professionals or experts is one of the key advantages of investing through MF. They regularly carry out extensive research on the company, the industry and the economy, thus ensuring informed investment. Secondly they regularly track the market. Thus, for many of us who do not have the desired expertise and are too busy with our vocation to devote sufficient time and effort to investing in equity. MF offer an attractive alternative.


Point, 2-Putting eggs in different baskets are another advantage of investing through MF. You know that even with small amounts we are able to enjoy the benefits of diversification.  Huge amount would be required for an individual to achieve the desired diversification, which would not be possible for many of us’Diversification reduces the overall impact on the returns from a portfolio, on account of a loss in a particular company/sector.


Point 3-MU industry is well regulated both by SEBI and AMFI. They have over the years,introduced regulations, which ensure smooth and transparent functioning of MF industry.


Point 4-Market timing becomes irrelevant. One of the biggest difficulties in equity investing is WHEN to invest, apart from the big question WHERE to invest. While investing in a MF solves the issue of where to invest, SIP helps us to overcome the problem of when.SIP is a disciplined investing irrespective of the state of the market. It thus makes the market timing totally irrelevant. And today when the markets are high, it may not be prudent to commit large sums at one go. With the next 2-3 years looking good from Indian Economy point of view, one can expect handsome returns through SIP’.


Point 5- Does not strain our day to day finances, MF allow us to invest very small amounts (Rs.500 to 1000) in SIP as against larger one term investment required , if we were to buy stock directly from the stock market.  This makes investing easier as it does not strain our monthly finances.  It ,  therefore, becomes an ideal investment option for a small time investor, who would otherwise unable to enjoy the benefits of investing in the equity market.


Point 6 -  Reduces the average cost in SIP, we are investing a fixed amount regularly therefore  we end up buying more number of units when  the markets are down and NAV is low and less number of units when markets are up  and the NAV is high.  This is called rupee cost averaging.  Generally, we would stay away from buying when the markets are down.  We generally tend to invest when the markets are rising SIP works as a good discipline as it forces us to  buy even when the markets are low, which actually is the best time to  buy.


Point 7 -  Hopes to fulfill our dreams, the investment we make are ultimately for some objectives such as to buy a house, children s education, marriage etc.  And many of them require a huge one-time investment.  As it would usually not be possible to raise such large amounts  at short notice , we need to build the corpus over a longer period of  time, through small but regular investments.  This is what SIP is all about.  Small investments over a period of time, result in large wealth and help to fulfill our dreams and aspirations. Dear friend since you are one of the loved one in your family, please take a decision to start an SIP(MF) for three years @ Rs.1000/- pm(minimum). The MF should be four star and above Crisill rated. It will help you to meet the expenses like school education, marriage of children, purchasing of house, vehicle etc. In addition if you are in urgent need of money you can sell the units at your credit in the stock exchange at the prevailing NAV.


Good Luck,                                                                           see  you later.