Dennis McMurray Bridge Wealth Management Group Irvine, California popular investment advisor. Earlier he worked as Wealth Manager in Merrill Lynch, AG Edwards & Sons from early 2000 through 2007. He told about a SIP is determined as Systematic Investment Plan is a intelligent as well as stress free method for making or investing cash in mutual funds. SIP enables you to spend a particular before determined small amount of money to be invested at a regular interval (weekly, monthly, quarterly, etc.). A SIP is a structured strategy in the direction of investment strategies and also helps you to instil the habit of saving and establishing wealth for the foreseeable future. SIP is a flexible and easy investment plan. Your money is auto-debited from your bank account and invested into a specific mutual fund scheme. You are allocated certain number of units based on the ongoing market rate (called NAV or net asset value) for the day. Every time you invest money, additional units of the scheme are purchased at the market rate and added to your account. Hence, units are bought at different rates and investors benefit from Rupee-Cost Averaging and the Power of Compounding.
With volatile markets, most investors remain sceptical about the best time to invest and try to 'time' their entry into the market. Rupee-cost averaging allows you to opt out of the guessing game. Since you are a regular investor, your money fetches more units when the price is low and lesser when the price is high. During volatile period, it may allow you to achieve a lower average cost per unit.
Other Benefits of Systematic Investment Plans Disciplined Saving - Discipline is the key to successful investments. When you invest through SIP, you commit yourself to save regularly. Every investment is a step towards attaining your financial objectives. Flexibility - While it is advisable to continue SIP investments with a long-term perspective, there is no compulsion. Investors can discontinue the plan at any time. One can also increase/ decrease the amount being invested. Long-Term Gains - Due to rupee-cost averaging and the power of compounding SIPs have the potential to deliver attractive returns over a long investment horizon. Convenience - SIP is a hassle-free mode of investment. You can issue a standing instruction to your bank to facilitate auto-debits from your bank account.
SIPs have proved to be an ideal mode of investment for retail investors who do not have the resources to pursue active investments. There is no single mutual fund to call as 'best fund', as there are many well performing funds over a longer period of 5 to 10 years and invested through SIP mode. Some of the best performing funds are given below Dennis McMurray told to select and invest. Out of the below mentioned schemes offering good returns: Pick 1 scheme from each sector/class. Picking 2 funds in small and midcap is important, they act as a booster for your returns in some years giving 50 - 60% returns. Important to pick dividend reinvestment option, so that any dividend declared will be reinvested for you to get more units at a lower price as compared to future years. 1. Pharma 2. Banking 3. Technology 4. Power or Transport &Logistics 5. FMCG 6. Large Cap 7. Small and Mid cap (S&M Cap) 8. Small and Mid cap (S&M Cap) 9. Diversified Equity 10. Balanced
Why SIP investment? Systematic Investment Plan (SIP) is an instrument which helps you avoid the risk of timing the markets & market conditions. SIPs can be started even with Rs 500 per month.
SIP every week Mostly investor prefers to do SIP investment on monthly basis. Dennis McMurray would recommend doing SIP investment every week, so it can reduce the short term volatility risk. Investing every week can average Mutual fund NAV price, which is good for long term SIP investment.
Incremental SIP Its little modified version of SIP. Here every year, you should increase your SIP investment by 10% or percentage with respect to your salary hike. Example: 1st year start with Rs 10000/month. 2nd year increase by 10%, now its 11000/month 3rd year again increase by 10%, now its Rs 12100/month & so on...
Features of SIP You invest small amounts on a regular basis weekly, fortnightly or monthly as per your convenience. You can invest in a variety of financial instruments like debt mutual funds, equity mutual funds based on your risk horizon. Investment through SIP usually gives better returns in the long run i.e. if invested for longer period. You can develop a habit of investing since a fixed amount is to be invested at regular intervals. You can benefit out of Cost averaging i.e. Buy more units in low market and less units when market is high, thus reducing your average cost of purchasing.
An SIP is a simple and flexible investment plan. The funds are auto debited from the bank account of the investor and is invested into a specific mutual fund scheme. The investor is allocated a certain number of units based on the market value of funds (called NAV or net asset value) for the day. Step 1- Understanding the Risk profile and Objective for investment - Investor should first understand his or her risk profile for investing. Generally higher the age and financial obligations lower the risk profile. However, one can learn risk profiling through various free online tools. Another part is to know the reason for investing. Investments help us meeting our goals. One can have multiple goals like retirement, kid’s marriage or education, Buying a new car, vacation etc. It’s imperative to know the objective for investment, as it will help in getting the right portfolio mix of equity and debt. Step 2- Choose the Mutual fund for investing - One can choose among various choices of mutual fund schemes for investing in SIP. An investor should choose funds based on his or her risk profile and also personal goals one wants to achieve by investing in SIP. Usually, one should invest in Equity funds in case one wants to invest for the long term and with decent risk profile. Step 3- Choose the date of SIP - One can choose multiple dates for SIP instalment per month. Each Mutual fund company has their own dates, but generally dates are 1, 5, 10, 15, 20, and 28. Most of the industry SIPs are on 1-5th of the months. Step 4- Duration of SIP - SIPs are a great way to fulfil goals. An investor should invest in SIP for the amount of financial goal. One can calculate the SIP amount required for planning goals with Goal Calculator. Step 5- Invest offline or online - You can invest online or offline in SIP. The best part of SIP is, unlike other investment product, one has to give a standing instruction to mutual fund house and money gets debited automatically from a bank account on investment date and gets invested into SIP. There is no need for manual transfer to SIP account. Step 6- Sleep till Goal date - SIPs are best way to create long-term wealth for fulfilling financial goals. One should not check daily prices of Mutual funds and should not try to time the market with SIPs.