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Mutual Funds - How beneficial is the Systematic Investment route?

11 Jun 2004

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You wish you knew the right time to invest in the market. Who would not want to make handsome gains and exit the market making a neat profit in the bargain. But even experts have not been successful in timing the market accurately. Yet, there are ways you can invest wisely with minimal risk exposure. How? Through Systematic Investment Planning.

The systematic Investment Planning method allows you to regularly set aside a given amount on a monthly or a quarterly basis towards an investment avenue of your choice. It could be bonds, mutual funds, debt or any other. Such systematic planning is especially beneficial for those who lack the financial acumen to keep a track of the NAVs to enter the market at the right time. Regularly setting aside a sum on a monthly basis would mean buying certain units of lets say a fund at varying NAVs since the volatility in stock market is high.

For instance, if the NAV has been around Rs 8 for a unit it may fluctuate in the next month and rest at Rs 12. Further on the NAV may be even lower at Rs 5 or it may go up at Rs 13. At each of these fluctuation levels you regularly purchase units and end up buying the units at a reasonable cost thanks to the power of Rupee Cost Averaging. With rupee cost averaging the investor is able to buy units at a lower price compared to the average price of the unit. So what are the benefits of systematic investment planning?

Systematic Investment Planning can take care of inflation since it acts as a cushion absorbing the ups and downs of rising prices. Through SIP the investor gets the benefits of compounding besides the convenience it offers. Also he need not worry about timing the market.

Source: dwt BACK

To be added soon

Priyanshu B. Tanna

SEBI registered IFA

ARN119467 & EUIN E-183966

To be added soon

Bharat Tanna

SEBI registered IFA

ARN26176 & EUIN E-044509

To be added soon

Kundan B. Tanna

SEBI registered IFA

ARN294073 & EUIN E-553599

Risk factor

Risk Factors – Investments in Mutual Funds are subject to Market Risks. Read all scheme related documents carefully before investing. Mutual Fund Schemes do not assure or guarantee any returns. Past performances of any Mutual Fund Scheme may or may not be sustained in future. There is no guarantee that the investment objective of any suggested scheme shall be achieved. All existing and prospective investors are advised to check and evaluate the Exit loads and other cost structure (TER) applicable at the time of making the investment before finalizing on any investment decision for Mutual Funds schemes. We deal in Regular Plans only for Mutual Fund Schemes and earn a Trailing Commission on client investments. Disclosure For Commission earnings is made to clients at the time of investments. Option of Direct Plan for every Mutual Fund Scheme is available to investors offering advantage of lower expense ratio. We are not entitled to earn any commission on Direct plans. Hence we do not deal in Direct Plans.

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