Systematic Investment Plans Mba Project

A PROJECT REPORT ON “Systematic Investment Plan” A detailed study done in “Analyzing the Mutual Fund & Equity Schemes with SIP” Submitted in partial fulfillment of the requirement for the award of Post-graduation diploma in Finance Management

Submitted by MAHESHWARI M LONERKAR DPGD / JL10 / 0361 Under the guidance of Prin. L.N. Welingkar Institute of Management Development & Research

Acknowledgement

With Immense pleasure I would like to present this report on “Systematic Investment Plan” I would like to thank Welingkar Institute of Management for providing me the opportunity to present this Project My special thanks to the Mr. Mukund P. Kulkarni for their invaluable guidance, cooperation and for taking time out his busy schedule to help me Acknowledgments to my friends and all those who have helped me in this project

Maheshwari M Lonerkar

Declaration

I hereby declare that this Project report entitled “Systematic Investment Plan” Submitted in partial fulfillment of the requirement of Post-graduation diploma of Welingkar Institute of Management Development & Research is based on primary & secondary data found by me in various departments, books, magazines, and websites & Collected by me in under guidance of Mr. Mukund P. Kulkarni .

Date:

MAHESHWARI M LONERKAR

DPGD / JL10 / 0361

Certificate from the Guide

This is to certify that the Project work Titled “Systematic Investment Plan (Equity)” is a Bonafide work carried out by Maheshwari M Lonerkar (DPGD/JL10/0361) a candidate for the Post Graduate Diploma examination of the Welingkar Institute of Management under my guidance & directions.

Name of the Project Guide Mr. Mukund P. Kulkarni Signature of Guide Date:

Table of Content Particulars Acknowledgment Declaration Certificate of Guide SECTION I Introduction Systematic Investment Plan Concept of Systematic Investment Plan (SIP) Features of SIP Benefits & Disadvantage Why Systematic Investment Plan (SIP)? SECTION II Difference of SIP in Fluctuating Market and Rising Market Comparative Analysis of Systematic Investment Plan and Lump Sum Investment SECTION III Equity - The best asset class 7 Facts on Equity Investments & 7 good reasons to invest in SIPs Investment-mantra for ‘Equity SIP’s’ Beating Inflation comfortably SECTION IV Best Systematic Investment Plans in India for Mutual fund & Equity provider Investing Do’s and Don’ts Recommendations: CONCLUSION BIBLIOGRAPHY

Systematic Investment Plans

---A rupee a day, keeps worries away

Introduction A Systematic Investment Plan (SIP) is good tool that retail investors can utilize to optimize their investment strategy. SIP is nothing but a simple method of investing a fixed sum of money in a specific investment scheme, on a regular basis, for a predetermined period of time. A recurring deposit with the post office or a recurring deposit with a bank is also a SIP. SIP Systematic Investment Plan was already famous and proven in Mutual Fund context but now SIP has also come directly into Equity Stocks which is essentially Individual Stocks. Equity SIP is a new facility through which you can buy a script for a regular interval over a period of time for specified amount or for a specified quantity. Investing in mutual funds is not everybody’s cup of tea. Being dependent on factors such as a fluctuating stock market and risking your hard-earned money for a measly profit does not really help. If you are a disciplined investor however, and are interested in mutual funds, then the Equity Systematic Investment Plan (SIP) would work well for you. SIP requires you to invest a particular amount in a specific mutual fund scheme. In comparison, it functions much like a recurring deposit. You can plan a savings scheme for yourself and commit a particular sum of money each month on a pre-fixed date to the scheme. You can begin with as low as Rs 500 in ELSS (Equity Linked Saving Schemes) scheme and move on to Rs 1000 a month for other diversified schemes.SIP follows a simple mantra – buy when high and sell when low. This is a simple way to win in the stock markets.

However, the market needs to be timed well and this will take some time to figure out for the novice or busy player. That’s where SIP with its monthly pay scheme comes into the picture. Putting in a sum of money each month will ensure that you have something in when the market is high, and when it is low securing your position in an unstable market. Geojit BNP Paribas recently launched SIP for stock investment where in investors with a regular monthly income can invest their monthly savings in stocks of their choice or a basket of stocks. The service is system driven and once the process is initiated, the investor can enjoy the convenience of investing regularly into the selected stock(s) in a seamless manner. Geojit BNP Paribas provides this service on the internet, which makes it easy for investors to plan their savings and investments at regular intervals. The discipline associated with investing strictly on a regular basis works much better that setting aside lump sums each month. Since you begin at a relatively younger age, the benefits of compounding are all yours. The convenience involved too is good, since you have to submit a request for purchase of shares only once. SIPs work for investors in the slightly long run and are useful to those who work on fixed budgets for the month, since the pre-planning helps. SIP is very useful for a time horizon of 10-15 years. An investor should carefully fix the amount to be invested so that it does not impact his cash flows over this time horizon. SIP imparts discipline to savings. On giving a post dated cheques or ECS instruction to any fund saving and investing happens automatically.

SYSTEMATIC INVESTMENT PLAN

A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save regularly. It is just like a recurring deposit with the post office or bank where you put in a small amount every month. The difference here is that the amount is invested in a mutual fund. SIP mainly helps us to get addicted to an investment principle – Income – Savings = Expenditure, instead of following the principle of – Income - Expenditure = Savings. SIP can be used in any type of mutual fund, equity or fixed income. This strategy is best used in an equity fund where an investor can capture the volatility in the equity markets to reduce the cost of investment. The NAV of any fund is determined by the market price of the stocks the fund has invested in. When an investor invests a fixed sum every month or quarter he gets more units of the fund when the markets are down and NAV is low than when the markets are up and the NAV is high. By investing across time horizons and market cycles, investors stand a better chance of lowering their investment cost.

SIP also helps investors to overcome the problem of ‘when’ to invest in the equity markets as irrespective of the state of the market an investor is always invested. SIP takes away the decision-making and converts it into a mechanized one. The lowering of risk, by entering at different time periods, however has the disadvantage of “averaging” out returns. A very important aspect to be kept in mind is the entry and exit load charged by all mutual funds. In a normal investment most funds either charge entry load or exit load. But in a SIP along with an entry load charged for each installment, an exit load is charged if the program is withdrawn before a specified period. This period could vary from six months to two years. This double whammy will reduce the returns in the short term. This makes SIP an inflexible investment program and expensive if withdrawn prematurely due to unforeseen emergencies. Finally, when considering a SIP, investors should note that it does not assure a return and continue investing without interruption as missing a few installments could lead to termination of the SIP. Since the time equity markets have been engulfed by volatility, the most frequently heard advice is that best way to invest in equities is “invest via the systematic investment plan route for long-term.” When an investor chooses to invest in mutual funds via an SIP, he makes investments (usually) in smaller denominations at regular intervals of time rather than making a single lump sum investment. By doing so investor benefits from the investing principle known as Rupee Cost Averaging. It is just like a recurring deposit with the post office or bank where you put in a small amount every month. The difference here is that the amount is invested in a mutual fund.

SIP allows you to invest a fixed amount regularly, so when funds NAV is more you get less units and when funds NAV is higher you get less units, so over a longer time frame, SIP will lower the average purchase cost of an investment. Another Benefit of investing in equity via SIP is you benefit from “Power of Compounding” As an investor, when you extend the investment period, you can earn profit on your current profit, and accumulate more wealth. This reiterates the fact that investing fresh capital at periodic intervals raises the accumulated investment. The minimum amount to be invested can be as small as 100 and the frequency of investment is usually monthly or quarterly. Equity SIP is a new facility offered through many Companies like ICICI DIRECT using which you can place buy orders for a prespecified amount or for a prespecified quantity in scrips of your choice at regular intervals over a period of time as selected by you. For instance, you can select an Equity SIP for a period of say 6 months to invest Rs. 2000 per month/ other permitted frequency in shares of BHEL or alternatively you can choose to buy 10 shares of BHEL every month/ other permitted frequency through Equity SIP. After you have provided the necessary details i.e the scrip, amount/ quantity to be invested, frequency of investment, total time period and authorized ICICI Securities (I-Sec) vide your Equity SIP request, I-Sec will place your Equity SIP buy orders at market price

Equity SIP allows you to systematically invest a prespecified sum/ buy a prespecified quantity of shares over any defined period of time in a disciplined manner. You can therefore invest at predefined intervals without the need to worry about the right time to invest in the Equity market. Unlike in the cash segment, where you have to time the market to make gains, Equity SIP helps you to bring down your average cost of acquisition of shares due to the averaging principle. Equity SIP eliminates the need for you to actively track the market and helps in distributing your investment over a period of time.

Concept of Systematic Investment Plan (SIP) Just like banks and Post office offers recurring deposit schemes, mutual funds offer an SIP option. Investors opting for an SIP option commit investing a pre-specified sum of money at regular intervals (generally every month) in a particular mutual fund scheme. Each periodic investment entitles investors to recieve units of that mutual fund scheme, which is subject to its NAV prevailing at that time.

Working of SIP Let us take an example to understand how an SIP works. Suppose 'X' decides to invest in a mutual fund through SIP. He commits making a monthly investment of Rs 1000 for a period of twelve months (starting 1st January 2006) in a fund named 'ABC'. The payment can be done by issuing twelve post-dated cheques of Rs 1000 each or through ECS facility (if available). Date 1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec

Monthly Investment

NAV

Number of Units

(a) Rs 1000 Rs 1000 Rs 1000 Rs 1000 Rs 1000 Rs 1000 Rs 1000 Rs 1000 Rs 1000 Rs 1000 Rs 1000 Rs 1000

(b) 46.29 48.08 52.78 56.36 58.42 56.42 62.14 67.58 71.7 76.19 83.97 89.92

(a)/(b) 21.603 20.799 18.947 17.743 17.117 17.724 16.093 14.797 13.947 13.125 11.909 11.121

Brief Summary Monthly Investment: Rs. 1000 Period of investment: 12 months (1st Jan 2006 to 1st Dec 2006) Total amount invested: Rs. 12,000 Total number of units credited to 'X': 194.925 Average cost/unit: Rs 61.5621

Note: Entry and exit loads are applicable while investing through SIP option also. However, in this example, load has not been taken into consideration for the purpose of simplification. Benefits to 'X' Convenience and affordability because of an easy payment method Helps X to develop the habit of disciplined investing as he/she is compelled to fulfill his/her commitment of making a fixed payment every month Rupee cost average benefit - By investing through the SIP route, 'X' recieves 194.925 units at an average cost of Rs. 61.5621. However, had 'X' invested the whole of Rs. 12000 at one go, he would have recieved a different number of units. Suppose 'X' had invested Rs. 12000 on: 1st Jan 2006 - He would have recieved 259.24 units 1st Jul 2006 - He would have recieved 193.11 units 1st Dec 2006 - He would have recieved 133.45 units Since, it is not so simple for anybody to perfectly time the market; it makes a more sensible approach to invest through SIP option (for long-term, say 3 to 5 years). It actually makes the volatility in the stock markets work for investors. This example helps us to understand how SIP allows 'X' to take benefit of all the highs and lows of the market during this twelve months’ time period. Flexibility to redeem units at any time or making a change in the monthly investment amount

Features of SIP 1. Affordable to small investors It is affordable to pay a small amount regularly than paying a large amount as a whole. Moreover, many Asset Management Companies (from whom you purchase Mutual Funds shares) charge very less to no entry loads for SIP when compared to other one time investments. 2. Low market risk through Rupee Cost Averaging This is the best feature in this policy. Success in stock markets depends on pure timing. Highest profits can be gained when you invest in the right stocks at the right time i.e. when the markets are on a high. The problem here is we can't foresee this timing every time. (If you know when to invest and where to invest then what is the big deal? you can win jackpot every day!)This problem is eliminated through Rupee Cost Averaging. To understand this lets take an example. you started investing Rs 1000 for 3 months. In the first month, the markets are on a high, then price per share(NAV) will be high(say Rs 25).So you get less shares, in this case,1000/25= 40. In the second month, markets went down, then price per share dips(say Rs 20).So you get more shares, here 1000/20= 50 In the third month, lets say NAV is Rs 10.Then you get 1000/10= 100 shares. So on an average, you paid Rs 18.3 per share(25+20+10/3).Since you are buying small

amounts continuously, your investment will average out over a period of time. So the risk will be less no matter how the stock markets are. 3. Compounding effect It means the early you invest the better you gain. Let’s say you planned for SIP for 10 years investing Rs 1000 monthly. You stopped after 10years.Then your friend invested the same amount for 20 years. But due to compound effect, at the end of 20 years, you will get higher outcome than your friend. 4. Easy liquidity You can have the liberty to exit at any time even before the agreed time period. But some exit load shall be charged. 5. Mode of payment There are two options here 1. Through Electronic Clearance Service(ECS)Here the mutual fund will debit certain amount from your account as per your instructions. 2.Postdated cheques : You can also give postdated cheques.Since they are dated ahead, they can only be cashed on the given date. Note that all the mutual fund schemes do not offer SIP. Liquid funds, cash funds and floating rate debt funds belong to this category. All types of equity funds, debt funds and balanced funds offer SIP. Systematic Investment Plan is very useful for beginners as it is risk free and independent of markets. You also get better returns by investing regular fixed investments.

Benefits of SIP • Investments are consistent and steady. • Power of Compounding: More the length of investment, more the earnings( early bird advantage) • Power of Rupee Cost Averaging: Market’s volatility shall work wonders for you. • It is an entirely mechanized process and involves no complications. • It enables to overcome spending and encourages savings, thereby securing future. • It will not cause strain on one’s budget as investment amount can be so less than one does not realize its being withheld.

POWER OF COMPOUNDING: One cannot afford to ignore Inflation as well as Time value of money! I shall take two examples to explain this concept. With the help of the examples, you understand the worth of investing early and regularly and to stay invested over a long period of time. Helps in Compounding Your Wealth Getting rich is simpler than you think, here's a simple formula to get rich: Start Early + Invest Regularly = Create Wealth

POWER OF RUPEE COST AVERAGING: Markets conditions are never steady. They move up, down or stay flat. If one wants to take advantage of that, one invests a fixed rupee amount at certain regular intervals and thus benefits from market volatility. This is illustrated very clearly in the picture below. Invest Regularly - Fights Market Volatility Every investor dreams of purchasing stocks at a low price and selling it at a higher price. But, how does one know whether any given time is the right time to buy or sell? Many retail investors try to judge the market movements and end up losing their monies in the long term. A more successful strategy is 'Rupee Cost Averaging' wherein you invest a fixed amount regularly. Thus you purchase more when the prices are low and purchase less when the prices are high. SIP investments take advantage of this strategy

In the long term, the SIP investor gains as his investments are unaffected by market volatility.

Disadvantages of SIP No downside Protection - Investors should remember that despite of all the advantages that SIPs have, they are subject to market risks and do not protect investors from making a loss or ensure them profits in falling markets. Portfolio risk remains - SIPs are also subject to security risk. Mutual fund schemes investing in portfolios that turns out to generate negative returns are bound to make investors incur a loss even if the investment is made through SIPs. Ideal Profile of Investors Investors opting to invest through an SIP option should: have a long-term investment horizon, be willing to invest regularly, keep patience; and who cannot invest enough amount at one go Before opting for SIPs SIP option is available for all types of funds. This arises the need for investors to do a little homework in order to get the maximum returns out of their investment. Defining the investment objective Investors should invest with a clear objective in their mind. It helps to figure out an indicative time period for which the investments would have to be made. Determining the investment surplus Investors should estimate the amount that they can afford to invest on a periodical basis. Investors should be conservative while making this estimate as an over estimated periodical investment amount may turn out to be a burden for investors.

Matching periodicity to fund flows SIPs are available in monthly and quarterly options. Investors should opt for an option that is in tandem with the periodicity of cash inflows. Selecting an appropriate scheme category Before investing investors should take the risk- return profile of a scheme into consideration. Investors should choose a scheme that suits their investment objective. For example: Equity funds are recommended to investors who have a high risk taking capacity, debt funds for riskaverse investors and balanced funds for investors with moderate risk taking capacity. Performing fund manager All fund schemes are managed by a fund manager. Investors should select a scheme which is managed by a proven and successful fund manager. However, past performances do not assure good returns in the future, but do form a basis for decision making. Ignore the market swings In the short term, sentiments drive the movements in the market. Therefore, investors should not let a short term correction or fall in the markets to bother them. As long as the long term prospects are intact, the investments are safe. Periodical review of investments After selecting an appropriate scheme and making investment in it, investors should continuously monitor the performance of similar schemes to the one in which the investment is done. This enables investors to compare the performance of their scheme with corresponding schemes and make necessary adjustments, if required.

Timeframe for Mutual Fund SIP: Theoretically doing a Mutual fund SIP for long term will work for investors. But for practical reasons we need to commit a Mutual Fund SIP for short term. That is we need to break that long term into many 6 months or 1 year periods and commit your Mutual Fund SIP for first 6 month or 1 year. Then at the end of 6 month or 1 year renew your Mutual Fund SIP for another 6 month or 1 year. You need to renew like this till you complete your predetermined long term period. You may think it is an unnecessary paperwork and waste of time. But you will be completely convinced when you have finished reading this article. Contribution towards Mutual Fund SIP Changes: How much you are contributing towards Mutual Fund SIP changes over a period of time. - At the beginning of a career a person will be able to commit Mutual Fund SIP for small sum of amount. As he progresses in his career, he or she will be able to increase his contribution towards Mutual Fund SIP. - Similarly, when someone reaches a stage where he need to spend more on kid’s higher education, daughter’s wedding, buying a house or meeting a major financial commitment, it is difficult for him to continue the same amount of Mutual Fund SIP contribution. - So whenever you renew your Mutual Fund SIP at the end of 6 month or 1 year, you can look at your cash flow position and based on that you can renew the Mutual Fund SIP for the increased amount or the same amount or the reduced amount.

Portfolio Review and Mutual Fund SIP:

Also it gives you a chance to review your portfolio with your financial advisor / investment planner once in 6 months or 1 year. - The scheme which you have chosen for Mutual Fund SIP is performing well when compared to its peers or not? You need to review this periodically. The scheme may turn out to be a laggard. - The scheme may be performing well when you have chosen for doing mutual fund SIP. But over a period of time, it could have derailed from its performance. This is something like our cricket players. They will be in a good form in the game for some period of time. Then they will lose their form after sometime. So you need to periodically checkup whether the fund is performing NOW or not. - If you are committing a Mutual Fund SIP for 10 years, then the financial advisor / investment planner may not be coming back to you whenever you call him for reviewing your portfolio. If you commit for 6 months or 1 year he or she will be definitely coming to you for renewing the Mutual Fund SIP. You can have a review with him or her at that time. - When you commit Mutual fund SIP for long term, generally we ignore to review it. It may generate poor returns. You can avoid this by periodic review.

Equity Exposure in Overall Portfolio and Mutual Fund SIP:

How much equity exposure you can give to your overall portfolio can change the amount of Mutual Fund SIP in equity and debt. - As the age goes up, your ability to take risk comes down. So you need to change your equity mutual fund SIP contribution periodically. - How close or distant you are to achieve your financial goals will also decide your equity exposure. If you have got long period to achieve your financial goal then you can have more equity exposure. When you have short period to achieve your financial goal, then you need to reduce your equity exposure. - Rebalancing your portfolio based on your predetermined asset allocation will also decide your equity exposure. All this can change your Mutual Fund SIP amount in equity funds. Final verdict on Mutual Fund SIP: So committing a Mutual Fund SIP for long term looks good on paper. For practical reasons we need to commit for short term and renew it at the end of every short term till achieving our financial goals. In this regard, instead of committing a Mutual Fund SIP just like that, having a long term financial plan and committing Mutual Fund SIP based on that plan will be really fruitful. This will make a solid difference in achieving your financial goals.

Why systematic investment plan? SIP refers to Systematic Investment Plan which is a mode of investment in Equity in a consistent way. Timing the market is not easy; hence a systematic investment plan works as the best vehicle to ride through the market volatilities. For instance – Rs 5,000 saved and invested every month for a period of 20 years would grow to Rs 30 lakhs at a conservative rate of 8% whereas a steady return of 15% through SIP can grow upto 76 lakhs. SIP is an ideal way for retail investors to benefit from power of compounding and create wealth in long term. SIP best works to achieve your medium and long term goals ; it may be building corpus for child’s education and child’s marriage , planning for retirement , planning for home , buying a car etc. All the goals can’t be achieved from monthly earnings alone , one needs to build corpus over a period of time. So the best way to realize that is Systematic Investment Plan. Small amounts saved and invested every month over a period of time can help create a large corpus. In a rising market the amount invested will fetch lesser units while in a falling market the same amount will get more units thereby providing the investor a low average cost per unit. Consequently in prevents the investor from trying to time the market. The point we want to drive home is that no matter the state of market , stick with SIP.

Sip’s tend to underperform in a consistently rising market since the basic principle of a SIP is cost averaging. If markets are consistently rising, you would end up investing at higher markets and get lower number of units. So Sips’ lose their edge if markets are not volatile and there are no ups and down’s since averaging concept will not work. So in nutshell, you don’t have to commit big amount in one go but small amount each month will just be perfect. Don’t worry about stopping and starting of SIP in rising or falling markets as this defeats purpose of SIP. The whole point of SIP’s is that market movement need not concern you at all. It is important to understand that Indian capital market is one of the most attractive in terms of risk adjusted return in the world. Sensex has yielded an average compounded annual return of 18-20 per cent over the last thirty years. To capture these attractive returns from the market, one should start investing early in his/her career. SIP is a good tool to go about investing small amounts right from the beginning and reaping the reward at the end of your career. Young people usually don’t take interest in longterm investments and tend to look for short-term gains. This often leads them to riskier investments and if the investments fail then they usually lose faith in the very concept of investment. Starting Early + Investing Regularly = Wealth Creation Start Early , Be Consistent, Be Patient – Reap rich Dividends in long run.

For instance , have a close look at returns generated by few equity schemes through SIPs over a 10 year period.

S.No

Equity Schemes

10-Year SIP return (%)

1

Reliance Growth

34.34

2

Magnum Contra

31.08

3

HDFC Equity Fund

30.97

4

HDFC Top 200

30.64

5

DSPBR Equity

29.73

- % Annualized Returns as on March 17, 2011 Art of compounding : Normal Compounding : Value of 1 lakh INR invested every year for 10 years (at 10% annual returns) : 17.53 lakh

Super Compounding: if investments of 1 lakh INR increases by 10% every year as well : 25.94 lakh Benefits of Compounding: Investing Rs 5,000 every month for 20 years will grow to : @8% – Rs 29,64,736 @10% – Rs 38,28,485 @12% – Rs 49,95,740 @15% – Rs 75,79,775 @18% – Rs 1,17,17,436 @20% – Rs 1,58,07,397

Are equity systematic investment plans worth it? Now-a-days, with the effect of rising inflation, the importance of money is increasing day by day. Money has become the first priority in everyone’s life as it is needed in various stages of life at any time. In this expensive world, it is unwise to keep money idle. So, the need is to make money from the money we have which can be achieved by making the right investments. Though the equity market gives good returns, it is highly volatile due to its constant rise and fall. Now, the question arises as to how can one safeguard their money from market volatility? The answer lies in Systematic Investment Plans in Equity. Who can deal in the Equity market? Anyone can enter the equity market and build their own portfolio through DIY-SIP in equities, a product offered by HDFC securities. DIY SIP stands for Do It Yourself Systematic Investment Plan. Another option is the Reliance Securities of the Anil Ambani group introduced RSP (Research Stock Purchase). DIY-SIP allows the customers to enter in the market with small investments. It provides a systematic way to gain direct exposure in the equity markets. ICICI started the new concept of equity SIPs on the lines of mutual funds. It invests a fixed amount every month or invests in a fixed number of stocks daily where one can invest in any blue chip funds or Exchange Traded Fund (ETF).

About Blue Chip Funds Blue chip value funds provide updates on monthly holdings on or around the 15th of each month .There are several ways to invest in Blue Chip Funds. Shares can directly be acquired by the investors through a broker, a direct stock purchase plan or a dividend investment plan. The best way is to invest in the ‘Diamonds’. Diamonds are the investment instrument traded on the American Stock Exchange. As Diamonds have the dual advantage of low expense ratio as well as tax efficiency, they are preferable over blue chips mutual fund. Diamonds are most efficient as they are traded on an exchange. Why should one choose Equity Systematic Investment Plans? It allows you to buy shares, gold etc. at low rate and well spaced out intervals and sell them when the rates are high. There is a lock-in period of SIP’s of 3 years after which one can choose to stay invested in the SIP or cash out. One mistake committed by many investors is that they buy shares at high rates and sell them when the market is going down. Equity SIP enables one to avoid this mistake. Equity SIPs also help one by avoiding the risk of buying shares at high rates. Many a time, it may be possible that for certain period of time, the market is moving down. At this time you should not get panicked and cash out of your investments. You must continue your investment through Equity SIPs and give them some time

to bear fruit. Equity Systematic Investment Plans are meant for long term investors. Moreover, the choice of the stock should be made based on the fundamentals of the company. Equity SIPs are extremely beneficial for those who do not know when to enter and exit the market. With the help of Rupee cost averaging, one tends to invest a fixed sum and not in a fixed number of shares. This practice works more often than not for investors. Also, through Equity SIPs, there is no need to pay extra charges for buying shares. However, one must understand that everything does have a flip side and in this case, the disadvantage is that equity SIPs being market linked instruments, the risk involved is also substantial. When anyone invests in Equity SIPs, no additional cost is applicable other than the charges of the regular brokerage and the cost for maintaining an account to hold shares in electronic format. Equity SIP works almost like Mutual Funds (MFs). Broking charges vary depending on the investors; they must understand the market and then invest. Today, some Asset Management Companies (AMCs) or mutual fund houses also provide the ease and convenience of transacting games. They have set up their online transactions platforms, where one can invest in SIPs through IPIN (Internet Personal Identification Number). For a person investing in the market, the necessary condition is that they should be patient. One must understand that they have to stand their ground during market swings.

Sometimes, the market may see a major correction. During such situations, an investor should try and buy shares so that the loss in previous investments gets adjusted. When the market rises again, one can sell the shares and book profits. If a person invests in a wrong instrument, he should exit it as soon as possible. With the amount earned, he can buy another product after conducting his research. Equity SIPs helps one to gradually increase their wealth by investing small amount of money regularly, over a long period of time.

Month 1 2 3 4 Total Average Purchase NAV (Sum Total of NAV's/Total Number of investments made) Average costs per unit (Sum Total of Investment/ Sum Total Units Alloted)

Amount Invested (Rs.) 1,000 1,000 1,000 1,000 4,000

Falling Volatile Rising Market Market Market Units Units Units NAV Alloted NAV Alloted NAV Alloted 10 100 10 100 10 100 12 83.33 8 125 12 83.33 14 71.43 6 166.67 8> 125 16 62.5 4 250 10 100 52 317.26 28 641.67 40 408.33

13

7

10

12.61

6.23

9.8

Thus we see that the average unit cost under Systematic Investment Plan will always be less than the average purchase price per unit irrespective of the market rising, falling or fluctuating.

Difference of SIP in Fluctuating Market and Rising Market Let us suppose that you would like to invest Rs. 1,000 every month, in an equity fund using the SIP. The following table shows how your investments would look in the two scenarios of fluctuating and rising market.

Average Unit Cost Average Unit Price Assumed NAV @ Q12 Market Value

(Rs. 12,000/1435.9) = Rs. (Rs.12,000/961.1) =12.49 8.36 (Sum of Purchase price / (Sum of Purchase price / 12) 12) = Rs. 9.13 = Rs. 12.72 Rs. 14.90

Rs. 16.00

(1435.9 units x Rs. 14.90) (961.11 units x Rs. 16.00) = = Rs. 21,395 Rs. 15,378

Therefore, the average unit cost is lower than average unit price irrespective of market rising or fluctuating. This happens because you get the advantage of buying more units when the market is low and averaging out the purchase price.

Comparative Analysis of Systematic Investment Plan and Lump Sum Investment Mutual Funds over the years have gained immensely in their popularity. Apart from the many advantages that investing in mutual funds provide like diversification, professional management, the ease of investment process has proved to be a major enabling factor. However, with the introduction of innovative products, the world of mutual funds nowadays has a lot to offer to its investors. With the introduction of diverse options, investors needs to choose a mutual fund that meets his risk acceptance and his risk capacity levels and has similar investment objectives as the investor. Most importantly, mutual funds provide risk diversification: diversification of a portfolio is amongst the primary tenets of portfolio structuring, and a necessary one to reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified to apply the theories of portfolio structuring to our holdings and hence would be better off leaving that to a professional. Mutual funds represent one such option.

Lastly, Evaluate past performance, look for stability and although past performance is no guarantee of future performance, it is a useful way to assess how well or badly a fund has performed in comparison to its stated objectives and peer group. A good way to do this would be to identify the five best performing funds (within your selected investment objectives) over various periods, say 3 months, 6 months, one year, two years and three years. Shortlist funds that appear in the top 5 in each of these time horizons as they would have thus demonstrated their ability to be not only good but also, consistent performers.

SIP and Lump sum are the two techniques to invest in mutual funds. Any investor can choose one out of them and can invest their money into mutual funds. SIP is Systematic Investment Plan which is very helpful to salaried and middle class man. They can invest their saving into Systematic Investment Plan and can collect huge funds for future.

SIP is paid in monthly or quarterly as per the scheme. But lump sum is paid only one time and the whole transaction is based on this investing money. Opting SIP, an investor can invest their saving into it and can safe his money doing that. SIP is good because if it seems that market will goes down in few days so an investor can safely withdraw his money and can safe his money.

Invest as you Earn!!! An individuals’ tendency…it’s so very strange and baffling! We purchase equipments in bulk if we get it at cheaper rates and when they are costly, we tend to purchase lesser. But this tendency takes a reverse swing while we talk of savings and investment. In case of savings and investment, when the prices are high, we purchase stocks while we sell when the prices are very low. This is a typical pattern justifying the dual sentiments of greed and fear functioning which leads us to difficulties. Individuals should understand and apply same logic to equities similar to buying products in the course of a discount sale.

Savings: Earnings – Expenditures But these savings are taken over by inflation. Most of us are unaware while those who are ignore the effect of inflation while considering investments.

Hence, one must learn to invest smartly. If one kicks off invest at an early stage of life and keeps continuing it at regular intervals, he can gather a sizeable amount for future. Majority of us procrastinate savings. The more you postpone more the loss. So, savings must be of utmost significance in one’s life. SIP can facilitate savings in a systematic and handy way.

Equity - The best asset class

Equity gives best inflation adjusted return among all asset classes over a long period of time

Returns are on CAGR basis. Blue bar reflects inflation adjusted return. As the graph shows, equity is the only asset class which has given positive inflation adjusted return of 9.77% against other asset classes. It is evident from the graph that in the long term, equity investments have helped outperforms various other investment avenues and has also helped beat inflation by a huge margin. The capital markets are the tantalizing pulse of any economy, as the capital market indices to an extent reveal the confidence of investors (both domestic as well as foreign) in the economy. But the present volatility of the Indian equity markets steered mainly by debt-overhang situation in the Euro zone and sovereign rating downgrade have dented the confidence of many of you investors and may have even sent shivers down the spine.

Since the last peak of the Indian equity markets (attained on November 5, 2010, where the BSE Sensex was at 21,004.96), we are still down by good -24.5%, and on

year-to-date (YTD) basis by about -22.9%; with of course a series of intermediate impulse and correction. And putting a traders hat, some of you may have also indulged in immense trading, thus trying to time series of peaks and troughs in this market - and may have even found it to be thrilling experience. But let us apprise you that a trader is good only until his last trade. You don’t know what the future has in store for you - good, bad or ugly? Remember the thrill of timing the market, can give you a kick, but the kick can kick you out. We believe that while the markets have turned turbulent at present in the last one year, it is important to stay invested and of course do more value picking.

The chart above reveals that over more than two decades the Indian equity markets have witnessed a series of both - positive as well as negative economic and political events. But a noteworthy point is that only those who have shown their perseverance to stay invested for the long-term have gained despite such impulse and corrective phases steered by both positive as well as negative economic events occurring across the globe. If were to invest a sum of 100 on November 26, 1991 (when the Sensex was at 1,855.94), the same today would have yielded a sum of 854 as on November 24, 2011, thus clocking a whooping return of 754.5% on an absolute basis. On the other hand all those who have participated in exuberant phases of the equity markets or acted on the wrong advice of investment consultant or even engaged in trading have either lost wealth or clocked petite returns. Hence, we believe that it is imperative for both new as well as existing investors to refrain from making blunders of timing the markets, or get carried away by the exuberance created by the market. The Systematic Investment Plan (SIP) route offered by mutual funds can help you tide the volatility of the equity markets well (by investing systematically); but a long-term investment horizon is indeed needed.

7 Facts on Equity Investments & 7 good reasons to invest in SIPs Fact No. 1: Over a long term horizon, equity investments have given returns which far exceed those from the debt based instruments. They are probably the only investment option, which can build large wealth. Fact No. 2: In short term, equities exhibit very sharp volatilities, which many of us find difficult to stomach. Fact No. 3: Equities carry high risk, that even to the extent of loosing ones entire corpus. Fact No. 4: Investment in equities requires one to be in constant touch with the market. Fact No. 5: Equity investment requires a lot of research. Fact No. 6: Buying good scrip’s require one to invest fairly large amounts. Fact No. 7:

Equity investors require lot of patience and need to have taken rational

and proactive decisions (detachment from emotions).Systematic Investing in a Mutual Fund is the answer to preventing the pitfalls of equity investment and still enjoying the high returns. And it makes all the more sense today when the stock markets are booming.

1. It’s an expert’s field – Let’s leave it to them Management of the fund by the professionals or experts is one of the key advantages of investing through a mutual fund. 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, mutual funds offer an attractive alternative. 2. Putting eggs in different baskets Another advantage of investing through mutual funds is that even with small amounts we are able to enjoy the benefits of diversification. Huge amounts 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. 3. It’s all transparent & well regulated The Mutual Fund industry is well regulated both by SEBI and AMFI. They have, over the years, introduced regulations, which ensure smooth and transparent functioning of the mutual funds industry. This makes it safer and convenient for investors to invest through the mutual funds.

4. Market timing becomes irrelevant One of the biggest difficulties in equity investing is WHEN to invest, apart from the other big question WHERE to invest. While, investing in a mutual fund 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 thru’ regular investing. 5. Does not strain our day-to-day finances Mutual Funds allow us to invest very small amounts (Rs 500 – Rs 1000) in SIP, as against larger one-time investment required, if we were to buy directly from the 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 not be able to enjoy the benefits of investing in the equity market.

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 the 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. 7. Helps to fulfill our dreams The investments 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 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 fulfill our dreams & aspirations.

Investment-mantra for ‘Equity SIP’s’ Timing the markets is not something one can achieve with accuracy since equity market is never a stable environment. It is more of a gut feeling. Once can never surely time the market. Markets are driven not just by earnings but also by sentiments.

SIP will work best if following acts are done:  Start Early  Invest regularly  Invest for Long term  Invest in right Assets In such a scenario, an ‘Equity SIP’ concept may bring in much needed discipline among small investors to invest regularly in equities and not to invest lump sum in high risk stocks when markets are on an all-time high. With volatility in equity markets at an all-time high , starting with an equity SIP in a fundamentally sound stock may not be a bad option. Rather than waiting on sidelines in hope of markets sliding down further, start investing systematically and don’t defer your investment decisions any further.

Equity

Pro’s

SIP’s

Con’s Diversification may get

Minimize volatility risk

ignored Greater market risk

No additional cost of buying shares via SIP’s Don’t have to invest in lump-sum Fruitful for investment for long term. Good when investor doesn’t know when to

than mutual funds

enter or exit the market Averages out the investments over time

Certain things in life have to be experienced to be believed. Infosys Technologies made their IPO (Initial Public Offering) in 1994. The share was priced at Rs 95 and all the investors who applied for shares got allotment. After five bonus issues and a stock split, the original 100 shares have grown to 12,800 shares and this is worth Rs 3.5 crore as per the current market rate. If we include the several lakhs that Infosys has given as dividend to the share holders, the amount will be much bigger. It is interesting to note that the same amount of Rs 9500, if deposited in a bank (fixed deposit) in 1994 would now be worth around Rs 38,000 only. Since going public, this great company has created enormous wealth for investors.

To cite another example: Rs 10,000 invested in Geojit IPO in 1995 is today worth Rs 12.4 lakh and the investor would have received Rs 1,33,450 (more than ten times the original investment) as dividend, till date. Investment in blue chip stocks and mutual funds has also rewarded investors handsomely. For instance: an investor who had invested Rs 1 lakh in Birla Sunlife Tax Relief ’96 in March 1996 would have received Rs 21.6 lakh in tax free dividends alone by June 2008!

This story of phenomenal wealth creation might sound unbelievable for a person without any exposure to the capital market. Therefore, it is important that investors be introduced to the capital market if they are to participate in and reap the benefits of this wealth creation. However, investors should be guarded against risks of investing in low grade companies. An investment of Rs 1.8 lakh in HFCL in 2000 is now worth only Rs 1200.

Most investors lack the financial expertise, time and inclination required for direct investment in stocks. Mutual funds, particularly Equity Diversified Funds that invest predominantly in stocks have given attractive returns to investors. As on 30-07-2010, thirty one equity diversified mutual funds in India have given an annual average return of more than 22% during the last 5 years, which are tax free returns. Unfortunately, majority of the investors are not aware of the fact that such fabulous returns are available from smart investments. A safe and systematic method of investing in stocks through the mutual fund route is by choosing a Systematic Investment Plan (SIP). Here, the investor invests a particular amount (as low as Rs 1000) at regular frequency, say, every month. An ECS debit arrangement with the investor’s bank will make SIP very convenient. The great merit of SIP is that it absorbs the volatility in stock prices. When market declines investors get more units thereby benefiting them in the long run. In the context of the emerging India growth story, SIP in equity diversified funds would be a good investment idea.

Beating Inflation comfortably • Average inflation during the past fifteen years has been about 7 Percent. • Equity returns have beaten inflation by a higher margin than gold or a Bank FD over the past fifteen years. • Wealth Creation through equity will also enhance your real purchasing power in a manner other assets classes will be hard pressed to match •

This is the most important reason why we must have equity in our portfolio.

Best Systematic Investment Plans in India Mutual Fund

3 YearsInvestment 36000

5 YearsInvestment 60000

10 YearsInvestment 120000

12 YearsInvestment 144000

Scheme Name

%

Amount

%

Amount

%

Amount

%

Amount

Birla SunlifeEquityFund DSP BR Equity Fund

26

51990

17

92033

29

570925

27

847695

30

55142

22

103852

32

656368

28

890730

Franklin India Blue Chip Fund HDFC Equity Fund

28

54785

20

98935

29

549491

27

860441

39

61979

26

112626

34

721916

32

1142897

HDFC Top 200 Fund

34

57909

24

109045

33

706670

ICICI Prudential Growth Fund Reliance Growth Fund Reliance Vision Fund

25

51186

16

90158

25

437115

22

616589

29

54014

21

100716

38

901404

35

1407815

25

51789

17

91941

33

677154

31

1078457

SBIMagnum Global Fund Sundaram Growth Fund Tata Pure Equity Fund

29

54249

16

88337

31

607379

26

793162

24

50576

15

88069

25

458342

22

617858

27

52625

19

95385

29

554004

25

727228

*Calculations are done on 1st day of 2011 – Monthly Investment of Rs 1000 We should see them as Top Systematic Investment Plans in Last 10 Years or just Systematic Investment Plan Comparison. Calculations are done on Rs 1000 per month investment to keep things simple. If we would like to calculate for Rs 5000 or Rs 10000 – we can multiply the amount by 5 or 10.

Equity SIP Provider Equity brokerages such as ICICI Direct or HDFC Securities offer equity SIPs of varying amounts, frequencies and tenure. The latest to introduce this concept is Reliance Securities, which launched the Regular Stock Purchase (RSP) plan last week. . Other firms offering similar products include  HDFC Securities 

Reliance Securities

 Geojit BNP Parib as Financial Services  Kotak Securities 

ICICI Securities

 Motilal Oswal Financial Services You can set a SIP, which buys fixed number of shares or invest a fixed amount in equities on regular intervals. The investment amount can be given through cheques or transferred online through automated electronic clearance from your bank account. The shares are bought at prevailing market rate at the time of SIP. Most equity SIP plans offer you to create your own portfolio without any investment limits. There is no cap on either investments or number of equity. With equity SIP , customers can choose to invest at a specified frequency – daily , weekly , fortnightly or monthly in stock of your choice. The choice of a minimum investment amount is stipulated by each brokerage, varying across players. For instance, Motilal Oswal pegs the amount at Rs 2,000; for IIFL, it is Rs 5,000. There is, typically, no ceiling on the maximum amount that can be invested each month.

Alternatively, investors choosing the quantity-based option can buy a specific number of stocks in each tranche. Only the amount of investment you need to make may vary each time, depending on the stock price at that time. So, say you decide to buy five stocks of Company X each month. If the price of the stock this month is Rs 1,000, you will spend Rs 5,000. Next month, if the price drops drastically to Rs 500, you will end by investing just Rs 2,500. The option is high on liquidity, too. Investors can sell their stocks at any point, though it is not advisable, especially if one has purchased the stocks from a long-term perspective. An exit load is also not levied for premature exits, unlike MFs, where an exit within a year is usually penalised. The broking charges typically depend on the deal you have struck with your brokerage. It can vary at 0.05-0.50 per cent, charged per transaction (buying as well as selling). The brokerage is in line with that charged for regular delivery-based trades.

HDFC Securities HDFC Securities provides

DO IT YOURSELF SYSTEMATIC INVESTMENT PLAN (DIYSIP) DIYSIP is an unique product offerings through HDFC Securities which helps us to invest a prespecified quantity in stocks/ETFs of our choice at regular intervals over a period of time as selected by us. DIYSIP eliminates the need for us to actively track the market and helps us to use market volatility to build our portfolio. Benefits of D.I.Y. SIP: The power to take your own decisions and be your own fund manager. Systematic & disciplined manner of investing in equities. No burden of heavy investments at a single time. No lock-in period ensures you can sell, pause anytime you wish to. HDFC Securities' expert research team at your service to help you select and build a diversified portfolio. Varied investment options as per your needs and risk appetite

Equities Invest in the stocks we believe in.

Indices ETF Invest in Indices ETF and get return on investments at par with the index.

Gold ETF Invest in Gold ETF's which help we hedge and plan out our future gold requirements.

Reliance Securities Equity markets cannot be timed perfectly, specially emerging markets like ours. Thus, STP would act as an investment catalyst, aiming to derive the combined benefits of stability of debt along with power of equity at the same time. STP involves the process of investing lump sum in a liquid/debt scheme which would give fairly stable returns and then transferring a fixed amount to an equity scheme in a regular fashion. Once the equity allocation is determined as per the total portfolio consideration, equity investment can be allocated in a disciplined manner through STP.This would enable the investor to achieve a buildup in their portfolio of equities with a low amount of risk along with relatively stable returns of debt in the interim time period Preamble to Reliance SMART STEP - An Enhanced Version of STP Reliance SMART STEP is a special product feature which works on a proprietary scientific model, which adds intelligence to disciplined, long term and systematic investment habit. The scientific model aims to integrate the cyclical trend of equity markets in one cycle, which also depicts the inter-relation of macro & micro economic factors. The scientific model consolidates bull & bear phases in one cycle, which enables to portray the current positioning of the market. Thus, Reliance SMART STEP works on a simple but smart & attractive concept of "INVEST MORE when the current stock market is positioned at lower levels, INVEST LESS when current stock market is positioned at higher levels.

Why Invest in Reliance SMART STEP RMF is the first mutual fund house to launch such a special facility where in amount of each transfer from all liquid/debt schemes to equity schemes, would be determined on the basis of a logical & scientific model. The scientific model captures intrinsic volatility in a technique which enables to buy more units with less investment, as compared to Normal STP, for longer period of investment. Reinforces the proven fact that the optimum way of reaping benefits in any market cycle would be through a disciplined, regular and long term investment, along with the concept of low investment at higher levels and high investment at lower levels. Through this new offering, RMF aims to empower the investor with the high-yielding returns of equity along with stable returns of debt, through a systematic investment linked to the market levels. Historical Reference of Scientific Model

The scientific model has been tested since 1980. The above table and graph gives an illustration of various periods during which the scientific model has been tested and has given the values to be transferred at those BSE SENSEX levels. For illustration purpose, the periods are randomly selected which also depicts that the inherent volatility are captured by the model in a manner which aligns with the objective of Reliance SMART STEP .

Investment Process Flow At the time of enrolment of the facility, the investor selects any one of the Transferor (Liquid/Debt) Scheme, any one of the Transferee (Equity) Scheme and one plan out of the 4 plans. The investment is made initially in any of the Transferor (Liquid/Debt) Schemes selected by the investor either in lump sum or SIP mode. The system would calculate the monthly amount to be transferred under the selected plan, 2 trading days before the transfer date (10th of every month), based on the scientific model. However actual amount shall be transferred from Transferor (Liquid/Debt) Scheme and invested in the Transferee (Equity) Scheme on 10th of every month. Incase 10th is a non - transaction day, the amount shall be transferred on next working day. The 5 different plans, each with 3 transfer amounts are as follows: Plan

Low

Medium

High

Plan A

Rs.500

Rs.1,000

Rs.1,500

Plan B

Rs.1,500

Rs.3,000

Rs.4,500

Plan C

Rs.8,000

Rs.12,000

Rs.16,000

Plan D

Rs.15,000

Rs.22,500

Rs.30,000

Plan E*

X

1.5X

2X

*X amount would be decided by the investor at the time of enrollment for Plan E of Reliance SMART STEP. The minimum investment amount of X in Plan E would be Rs.30,000 & in multiples of Rs.500 thereafter. Investors should clearly indicate plans as mentioned above. Please note that if no Plan is mentioned / indicated in the Application Form, Plan A shall be considered as default Plan.

Eligible Transferor (Liquid/Debt) and Transferee (Equity) Schemes Transferor (Liquid/Debt) Schemes: Reliance Floating Rate Fund Reliance Liquidity Fund Reliance Liquid Fund - Treasury Plan Reliance Liquid Fund – Cash Plan Reliance Medium Term Fund Reliance Short Term Fund Reliance Gilt Securities Fund Reliance Monthly Income Plan Reliance Money Manager Fund Reliance Income Fund, Reliance Regular Savings Fund - Debt Option Transferee (Equity) Schemes: Reliance Growth Fund, Reliance Vision Fund Reliance Equity Opportunities Fund Reliance Equity Fund

Reliance Equity Advantage Fund Reliance Quant Plus Fund Reliance Regular Savings Fund - Equity option Reliance Regular Savings Fund - Balanced option Reliance Natural Resources Fund Reliance Banking Fund-Retail Plan Reliance Pharma Fund Reliance Media & Entertainment Fund Reliance Diversified Power Sector Fund Reliance Infrastructure Fund Reliance Tax Saver (ELSS) Fund* Reliance Long Term Equity Fund *Investment in the scheme is subject to the lock in period of three years. **This can be transferee scheme only after conversion into an open-ended scheme upon maturity. Reliance Tax Saver Fund is not an eligible transferee scheme for Plan Reliance Capital Asset Management Limited (RCAM) reserves the right to introduce or withdraw any of the above mentioned transferor or transferee schemes

Risk Factor Mutual Funds and securities investments are subject to market risks and there is no assurance and no guarantee that the objective of the respective scheme will be achieved. As with investments in any securities, the NAV of the units issued under the Scheme can go up or down depending on the factors and forces affecting the securities market. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of future performance of the Scheme. The names of the schemes do not in any manner indicate either the quality of the Scheme, its future prospects or returns. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lac towards the setting up of the Mutual Fund and such other accretions and additions to the corpus. The NAV of the Scheme may be affected, interlaid, by changes in the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. The Mutual Fund is not assuring that it will make periodical dividend distributions, though it has every intention of doing so. All dividend distributions are subject to

Investing Do’s and Don’ts • When one is investing in the market, they should first analyze the market. • While investing, one should keep some amount aside as a reserve. • People should invest in small sums and must diversify their investments. One should never keep all eggs in a single basket. • Investing in small amount is also helpful as then, in case of a loss, the amount can be recovered easily. • Equity SIP is a method by which customers have the option to invest their funds at a particular fixed frequency of time. It allows systematic investment in a disciplined way. • SIPs generate returns over a long period of time; they do not give results immediately. One has to be patient while investing in SIPs and be prepared to give it some time to fructify. • When the market is high you should buy less number of shares, and when the market is low you should buy more number of shares. Get the benefits compounded over a period of time. Money should always be in routed form. This means that if you are investing some amount than you should also get some returns on it, in other words, you should assess your Return on Investment or ROI. There should be a money life cycle. With Equity

Systematic Investment Plan, it is a customer’s choice to invest at specified frequencies which may be daily, weekly or monthly.

You need to vary only the amount of the investment every time you buy the stocks, depending on the stock price in the market. One should invest more when the market is down and should sell it when the market is up so that lesser investment can earn you more returns. Investment can be done in various means like in gold, shares, debt instruments or a combination. The amount to be invested can be transferred through a cheque or online from your account.

Recommendations: Investment is the technique by which people save the money for future and increase their living standard. Many people who don’t know and don’t want to take more risk by investing in shares and securities therefore Mutual Funds are better instruments to save their money for future and provide them better return. SIP and Lump sum are two techniques to invest money in mutual fund. People should not confuse about them. Both are better themselves. Wh en market is ups and down nature it is better to invest their money through SIP another reason for SIP is because it is monthly investment so when there are salaried person who want to invest money in mutual fund then SIP is good technique because they have limited saving that’s why SIP is good for salaried persons. When I surveyed in the market there are many people who really don’t know what actually mutual fund means is. I realized that there are many persons who don’t invest money in mutual fund they only invest in insurance or fixed deposit. I will suggest here that there is need of more advertising through canopies which will help to those people who want to invest in mutual fund and will get more information through canopies.

Some people prefer to invest a lump sum when they have the money available perhaps from a bonus at work. The benefit is that you are less likely to spend the money on other things! However, if you do not have a lump sum, you don't have to save up until you have a large amount to invest. You can invest a relatively small amount every month that can build up into a worthwhile nest egg. If you set up a monthly savings plan, you will soon come to think of your regular payment as an essential part of your budget. What's more, you can benefit from a phenomenon known as "rupee cost averaging", no matter how markets are performing: If the market goes up, the units you already own will increase in value. If the market goes down, your next payment will buy more units

CONCLUSION Systematic Investment Plan (SIP) is the winning strategy in present market scenario. Small investor can make his /her investment in Equity Fund through the monthly or quarterly of in multiple of 500 i.e. 500, 1000, 1500, 2000…….. Small investor can enjoy the volatility (Ups & downs) by investing regularly. Old investment in stock market is in present time showing losses event though SIP investment RETURN is far better in comparison of ONE TIME investment At this present down trend one can investment in Balanced Fund schemes. An SIP may not be able to lower the average purchase cost if equity markets rise in a secular manner. In such a scenario, the average purchase cost could actually rise. So in a market rally, SIPs could prove to be more expensive vis-a-vis a lump sum investment.

BIBLIOGRAPHY •

www.moneycontrol.com

•

www.investopedia.com

•

www.investmentmantra.com

•

www.finweb.com

•

Book on Systematic Investment Plan By Cnbc Network Tv

•

www.hdfcsec.com

•

www.reliancemutual.com

• India Today Magazine • Business India Magazine