A new mantra of
investment is griping India. If you are afraid of investing in the shares, because you could not hold the losses. You are not in a state to afford big single investment, and then there are something waiting for you. This is SIP (Systematic investment plan). Today lots of financial institutions are offering this service and many people is opting for them. In the last few years SIP is a big success in India. Day by day more and more
mutual funds are taking the SIP path. To opt for these services you do not have to do much. These services are now in available in your local bank. You only have to call up the investment manager and the rest is his part. You have only to give an one time standing instructions to the bank and a particular amount of sum will be deducted from your account. This is same like recurring accounts. The plan for SIP varies from Rs. 1000 to Rs. 5000 pm investment for six to three years. You have the further option for increasing the
period and amount of SIP. Further there are no restrictions on time period. It is up to you , how long you want to invest in SIP. This provides us with the option of starting with small amount and building on it. SIP is designed in a way, that the chances of loses are less. The month on which prices of mutual
Fund are less, we land up in purchasing more funds. Where as on the other hand, if the prices increases, we land up in purchasing less mutual funds. If calculate on some particular period, the average return is always more then the purchase amount. Lock in period in SIP, provide the fund manager with lot of freedom to invest in desired shares or bonds. This increases the chances of better return from the SIP. It makes the SIP a better investment plan. I am sharing with you the example of an executive, who has purchased the SIP plan for his daughter on her birth. He started with
rs 1000 pm and increased the amount with the period. Now his daughter is seven year old and has seven lakhs rupees in her name. One advantage of investing in SIP is
Tax benefit. If one invests for lock in period of minimum three year. He got tax deduction under section 80 cc of income tax act.
This abstract was checked by WhiteSmoke Solution.
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