Transcript Systematic Investment Plan

Systematic Investment Plan
I don’t have enough money to invest
I’m too busy making money to worry
about managing it.
I don’t have the time or expertise to
follow market movements and make
investments at the right time
SIP is an investment program that allows you to
contribute a fixed amount (as low as Rs.1000) in
mutual funds at regular intervals.
SIP
This approach allows you to combine -
Convenience
Rupee Cost Averaging
Flexibility
Power of Compounding
Why SIP?
 Investment experts the world over advocate Systematic
Investment Plan (SIP)
 Instills the much needed investment discipline
 Puts to work two powerful forces
Power of Compounding
Preeti started investing at the age of 25. She invested
Rs.10,000 each year for ten years and then she stopped
contributing
Rohit started investing at the of age 35 and then invested
Rs.10,000 each year for 25 years.
Power of Compounding
Rohit begins investing
at 35 a similar amount
of Rs.10000 annually.
He invests for the next
25 years and he too does
not withdraw any money.
25 year old Preeti invests
Rs.10000 annually for
10 years and stops. She
does not withdraw any money.
25
30
35
40
45
50
76.9 lacs
24.6 lacs
55
Start now!
60
Rupee Cost Averaging
Technique of buying a fixed rupee amount of a particular
investment at regular intervals, regardless of the NAV
Rupee Cost Averaging
Different Scenarios -
Market goes up
Market goes down
Market goes up and then down
Market goes down and then up
Market goes up – (1)
Monthly
Unit
Units
Investment
Price
Acquired
1200
10
120
1200
12
100
1200
20
60
1200
20
60
1200
24
50
Total : Rs.6000
Average: Rs.17.20
390
Average cost of acquisition = 6000/390 = Rs.15.38
Market goes up – (2)
Average cost : = Rs. 15.38
Average Unit price= Rs. 17.20
Value of investments at the end of 5 months = Rs 9360
Profit of Rs.3360
Market goes down – (1)
Monthly
Unit
Units
Investment
Price
Acquired
1200
24
50
1200
20
60
1200
12
100
1200
12
100
1200
10
120
Total : Rs.6000
Average: Rs.15.60
430
Average cost of acquisition = 6000/430 = Rs.13.95
Market goes down – (2)
Average Unit cost = Rs. 13.95
Average Unit Price = Rs 15.60
Value of investments at the end = Rs 4300
Loss is Rs.1700
The loss could have been Rs.3500 for lump sum investment
Market goes up after going down – (1)
Monthly
Unit
Units
Investment
Price
Acquired
1200
20
60
1200
12
100
1200
10
120
1200
12
100
1200
20
60
Total : Rs.6000
Average: Rs.14.80
440
Average cost of acquisition = 6000/440 = Rs.13.64
Market goes up after going down – (2)
Average Unit cost = Rs. 13.64
Average Unit Price= Rs 14.80
Value of investments at the end of 5 months = Rs 8800
Profit is Rs.2800
Market goes down after going up– (1)
Monthly
Unit
Units
Investment
Price
Acquired
1200
20
60
1200
24
50
1200
24
50
1200
20
60
1200
20
60
Total : Rs.6000
Average: Rs.21.60
280
Average cost of acquisition = 6000/280 = Rs.21.43
Market goes down after going up– (2)
Average Unit cost = Rs. 21.43
Average Unit Price= Rs 21.60
Value of investments at the end of 5 months = Rs 5600
Loss is Rs.400 (would have been Rs.1000 if invested at peak price)
How has an SIP worked in these schemes
Your total investment of
If you had
invested
Rs.1000 every
month in
Rs.12,000 over
1 year would
have grown
to…
Rs.36,000 over
3 years would
have grown to…
Rs.60,000 over
5 years would
have grown
to…
Since inception
(Rs. 1000 per month)
Rs.13,614
Rs.63,244
Rs.178,256
Rs.686,630
(26.06%)
(40.35%)
(45.28%)
(35.79%)
Rs.13,413
Rs.63,760
Rs.175,878
Rs.986.739
(22.71%)
(40.98%)
(44.68%)
(30.44%)
Rs.11,782
Rs.64,044
Rs.222,860
1,275,392
(-3.38%)
(41.33%)
(56.57%)
30.75%
FIBCF
FIPP
FIPF
* As on 30th June, 2006
SIP - The bottomline
Simplicity
Hassle Free
Low acquisition costs
Discipline
Franklin Templeton
All Franklin Templeton equity schemes offer SIP
Now you can invest in SIP on any day of the month
Low entry amount of Rs.1000
Risk factors
Please note that there is no guarantee that SIP will always
produce a profit
Before investing, please go through the offer document of the
respective scheme for more detailed risk factors.
Thank You
Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAV of the
schemes may go up or down depending upon the factors and forces affecting the securities market including the
fluctuations in the interest rates. There can be no assurance that a schemes investment objectives will be
achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its affiliates is
not necessarily indicative of future performance of the schemes. The above are only the names of the scheme and
do not in any manner indicate the quality of the schemes, their future prospects or returns. The Mutual Fund is not
guaranteeing or assuring any dividend under any of the schemes. The Mutual Fund is also not assuring that it will
make any dividend distributions under the dividend plans of the schemes though it has every intention of doing so.
All dividend distributions are subject to the investment performance of the schemes. The investments made by the
schemes are subject to external risks. Please go through the offer documents before investing. Statutory Details :
Franklin Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability
restricted to the seed corpus of Rs.1 lac) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee
(Trustee under the Indian Trust Act 1882) and with Franklin Templeton Asset Management (India) Pvt. Ltd. as the
Investment Manager. The fund offers NAV’s, purchases and redemptions on all business days except during the
period when there is a book closure.