Systematic Investment Plan

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Systematic Investment Plan (SIP)

Simple
Min Investment of only Rs.500

Intelligent
Benefit from the Power of Compounding

Practical
Link to your Financial Goals

Did you know ? If your current monthly expenses are Rs. 30,000/- p.m, after 20 years you will require Rs. 80,000/- p.m to maintain the same lifestyle
Assuming inflation rate of 5%

Did you know ? An education degree for your child which currently costs Rs. 10 lakh will cost Rs. 21 lakh after 15 years.

Assuming inflation rate of 5%

Individual Investor Needs: Investment Goals
• All individuals need to save for
– Retirement – Child’s education / marriage – Medical emergency – Other family obligations

Every individual has one or more of the above goals

Individual Investor: Life Stages
Earnings Consumption Savings

22 27 Young Independent Young Married

40 Middle Age

60 Retirement

All individuals have a finite period to save for their investment goals

Value of Money over time
Impact of inflation on monthly expenses of Rs. 30,000 today Value of Rs. 100,000 over time

100,000 79,599 62,368 48,102 38,288 30,000 37,689 78,353

Today

5 years

15 years

20 years

Today

5 years

15 years

20 years

At inflation of 5%

Investors need to beat inflation

Performance of Various Asset Classes
Cumulative annualised returns 1980-2004
15.6%

10.3% 6.7%

8.9%

5.7% 3.55% -1.1%

Inflation

Gold Growth

Bank FDs Real Growth

BSE Sensex

Equities outperform other asset classes over the long term

Individual investors are scared of ….. The Downside Risk in Equities The Risk of Market Volatility The Risk of Market Timing

What else makes a material impact on investments in equity ?

Investing in the BSE Sensex – 25 years
Returns are from 1981- Dec 2005

16.90% 15.07%

16.02%

Fixed investment at highest sensex value every year

Fixed investment at lowest sensex value every year

Fixed investment on 1st day of every month

Market timing does not matter over the long term

The Power of Compounding

Debt Instrument Monthly investment Assumed annualised return Final corpus Rs. 5,000

BSE Sensex Scenario A Rs. 5,000

BSE Sensex Scenario B Rs. 5,000

10% Rs. 43 lakh

15% Rs. 89 lakh

20% Rs. 1.9 crore

From Jan 1, 1984 to Dec 31, 2004 – a 21 year period

Summary
Investors needs to save regularly and invest those savings in higher return assets to create wealth

Long Term Systematic Monthly Investment in equity schemes is ideal for this

How Do You Achieve Your Financial Goals
• Retirement • Child’s education - international • Family commitments - medical emergency, etc

Retirement Planning
Monthly Household Expenses 83,579 Retirement corpus required to meet post retirement expenses. (if invested at 7%)

1.4 crore
30,000
Inflation 5%

Monthly investment needed to meet post retirement expenses 21 Yrs at 12% at 15% 12,583 8,083 5,090

Today

At the time of retirement

at 18%

Child’s Education
Educational Degree

34,20,000 20,00,000
Inflation 5%

Monthly investment needed to achieve this goal at 12% at 15% 12,456 10,166 8,237

11 Yrs When your child actually goes for this degree

at 18%

Present

Child’s Marriage

43,70,000 Monthly investment needed to achieve this goal 20,00,000
Inflation 5%

at 12% at 15% 16 Yrs at 18%

7,509 5,466 3,925

Present

When marriage actually takes place

So What Are The Benefits Of Investing Through A Systematic Investment Plan !

Benefit : 1

• The Benefit of Long Term Equity Investment
– Equities give superior returns among all asset classes over the long term – Mutual Fund has a track record of consistent good performance relative to index.

Benefit : 2

• The Benefits of Systematic Monthly Investment
– Takes out the risk of market timing – Adds the benefits of the power of compounding and rupee cost averaging

Benefit : 3

• Flexibility
– You can choose from a wide array of schemes – You can decide to keep invested amounts in an earlier scheme & invest future SIP instalments into a new scheme

Benefit : 4

• Added Convenience
– Auto debit facility across major cities in India – Regular account statements – Redemption request directly credited into your bank account

Make your investment goals a reality Start a S.I.P. today !

A Rupee Saved Is A Rupee Earned - A Long Journey Begins With A Small Step

www.tflguide.com

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