Markets
BSE See NSE See 39,330.87
218.13 (0.56%)
collapse Related Readings collapse

Mutual Fund SIPs - Not Age Dependent

| 9/26/2011 4:46 PM Monday

Q. I am a 45 year old government servant, and have some investments in the form of FDs and shares purchased over a period of time. Is it a good idea to start off with a systematic invest-ment plan at my age? If yes, what would be the ideal amount I should be setting aside each month? My monthly savings as of now, excluding all my responsibilities, comes to around Rs 15000.
- Amit Tandon Bhatinda

A. The concept of systematic investing is not related with age. Whatever your age is, if you have savings and want to invest them wisely, the systematic investment plan (SIP) is relevant. An SIP helps in multiple ways. It helps inculcate discipline by committing you to a monthly investment, which you may have otherwise neglected. Secondly, when you are investing in a category such as equity, where markets fluctuate a lot (volatile), the SIP ensures that you are investing over extended periods of time, through all market cycles, and hence buying at all levels of the market – high, low and in-between. This results in what is called averaging of cost, and makes you the eventual winner. You can initiate an SIP in debt, equity or hybrid (a mix of the two).

You can find below, a chart illustrating the performance of a leading Indian equity fund. An SIP of Rs 5000 per month initiated in January 2000 would have resulted in a portfolio value as high as Rs 42.39 lakhs by March 2011. That is about 26 per cent compounded return per annum, which is no mean performance. This performance is also due to the fact that the SIP continued through the terrible low points of 2008 and 2009. This highlights the principle that investors must not stop their SIP when markets have fallen, or be caught up in pessimism or fear, for when else do they get the chance to buy low?

 

Find More Articles on: DSIJ Magazine, Financial Guidance, Personal Finance, Mutual Funds, Product, Large Cap

news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »

DSIJ Mindshare

12345678910Last

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Logistics sector will play a vital role in making the concept of ‘Make in India’ a success. This will be further aided by some of the recent steps taken by Government of India such as granting of infra sector status to logistics sector.

Best and worst Performing Sector Funds of Year 2017

Best and worst Performing Sector Funds of Year 2017

As the year-end has approached most of you are eager to know the mutual fund movers and shakers of the year 2017. Read on to find the performance of various sector dedicated funds.

Markets may start positive, but volatility likely due to F&O expiry

Markets may start positive, but volatility likely due to F&O expiry

The start of the F&O expiry day is likely to be in the green, but volatility may creep in with the progress of the session. The SGX Nifty suggests that the Nifty could open at 10,525 with gains of 32 points at the opening bell. 

Pidilite announces buyback of Rs 500 crore

Pidilite announces buyback of Rs 500 crore

The buyback offer comprises purchase of up to 50,00,000 equity shares. The buyback offer size comprises 0.975 per cent of the total paid-up equity capital of the company.

Bank Nifty drags markets to close in the red

Bank Nifty drags markets to close in the red

The late session fall in Bank Nifty changed the direction of the market, leading to a marginal fall in the benchmark indices. Bank Nifty yet again resisted at its multiple point downward sloping trendline level at 25733.

Six major underperforming MF schemes having higher expense ratios

Six major underperforming MF schemes having higher expense ratios

Mutual funds with a large size of assets under management (AUMs) are supposed to have lower expense ratios. However, there are schemes with large AUMs but having higher expense ratios and generating lower returns. 

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Index has given a consolidation breakout at the 9420 level today and if the it sustains 9420, followed by 9628 on the upside, it has a long way to go.

Ten stocks close to their 52-week low

Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 12.35 p.m. on December 27.

Ten stocks close to their 52-week high

Ten stocks close to their 52-week high

The markets on December 27 opened gap down. BSE Sensex is trading at 34,068.15, up by 57.54 points and the Nifty is trading at 10,539.45, up by 7.95 points.

Five stocks with selling interest

Five stocks with selling interest

Overall volumes in futures & options currently stand at 62.75 lakh contracts with a turnover of Rs. 5,19,204.72 crore.