SIP Start Kiya Kya ?

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SIP nahi kiya toh kya kiya !

According to me the financial literacy is very poor among the youth today. People aren’t fully aware of various financial instruments out there than can help them grow. So If you are working so hard to earn money, then why shouldn’t your money work hard for you ? So here are the three magical words I’m going to say – “Systematic Investment Plan” or SIP

SIP == Piggy Bank

I’m sure most of you have had a small piggy bank sometime. Putting those coins randomly, or getting cash when elders visited was fun. SIP is exactly like piggy bank I would say. Just like you put money in your piggy bank, here you put the money in a Mutual Fund rather. Mutual Fund is a financial tool where people pool in a large sum of money which is invested by a Fund Manager of an Asset Management Company (AMC) in various companies and government bonds. So all the mutual fund  have two modes of investing money here: Lump Sum or SIP. I’ll talk about the latter one here.

SIP nahi kiya toh kya kiya ?

SIP is the best way to invest in a mutual fund without burning a hole in your pocket. For a minimum sum of Rs 500, you can start investing. Yes ! you heard it, you don’t need a large money to invest. And with everything going online, getting a mutual fund online is a cake walk. Simply choose a AMC, select a scheme, provide SIP start and end date along with the amount and other bank details.
Once your SIP is set up, sit back and see your money work for you ! The SIP amount will be auto-debited on the selected date for the duration set from your registered bank account. Once the duration is over, you can “Sell” or “Redeem”and get your money back along with the benefits ! 

Why should I start a SIP ?

You should start SIP because:
  • Setting it up is very easy
  • It can be as low as Rs 500 a month.
  • It can help you save tax. Yes, under the section 80C of the Income Tax act, investments of up to Rs 1.5 Lakh per annum are exempted.
  • Mutual Funds aren’t only for long-term. You can stay invested for as low as a 6 months ! Want to buy a new smart phone next year ? Start an SIP to get it !
  • It’ll help you buy your dream house, plan your next vacation and everything you wished for. One of the best form of savings along with the required liquidity.
  • You don’t need to be a Financial Guru to start investing and that’s the beauty of Mutual Funds. Anyone and everyone can start investing.

Why Do You Want to Save & Invest For ?

1) Child Education & Marriage 
2) Save for Retirement
3) Save Tax & Grow Money
4) Emergency Fund
5) Any Other Goal

Investing a small amount every month can help you create a large corpus in the next 15 to 20 years to meet future expenses like higher education abroad or their marriages.
Let’s say you earn Rs 50,000 per month and you have a new born child. You will need some some money 16 years later when he/she is ready to go to college and then probably some more 20 to 25 years later for their wedding expenses.
If you invest just 5% of your income (Rs 2500) every month in SIPs, increasing it by 5% every year, with an annual return of 16% it can grow to:
  • Rs 51 lakhs in 18 years, or
  • Rs 1.75 crores in 25 years
Most folks have a couple of insurance policies in their children’s name and assume that it will be enough – Nothing can be farther from the truth and be prepared for a nasty shock a decade later if this is your plan. This is because insurance plans usually give returns in the range of ~6% per annum on an annualised basis which may grow to a significant lumpsum in absolute terms but not so in real terms.
Insurance companies also invest in the equity markets – the difference is that they keep a large chunk of the profits with themselves, all in the name of safety and security.
Don’t get fooled. Save smarter. Start a SIP.

Are you aware that by investing in ELSS funds under Section 80c of the IT Act, you can save Income Tax upto Rs 45,000 in taxes ?

Do you feel you are paying a lot of Income Tax and want to reduce it ?

The government of India allows all individuals in India to invest upto Rs 150,000 in ELSS funds every year which can be claimed as a deduction under section 80c to save Income Tax.
What this means is that if you are in the 30% tax bracket, you don’t have to pay 30% tax on the tax saving investment of Rs 1.5 lakh that you make – Which amounts to a saving of ~ Rs 45,000 ( 30% of Rs 1.5 lakhs )
However, if you are unable to save and invest Rs 1.5 lakhs from your income, you can save a lower amount and still save tax.
Compared to other Tax Saving options, elss funds have the following advantages:
  • Lowest lockin period of 3 years ( Compared to 5 years and above for other options )

  • Highest Returns ~ 15 to 20% in the last 3 years ( Other products like FDs and Insurance give 6 to 8% returns )

Note: If you have declared at the beginning of the year that you will make tax saving investments but haven’t done so yet, you maybe liable to pay extra taxes at the end of the year.
India doesn’t have a Social Security system unlike the developed world and the onus for saving for our retirement is on Individuals. While the govt. has mandated Provident Fund and also created schemes like National Pension Schemes, the contributions to these are minimal.
They are also classified as ‘Debt category’ investments and return around 8% per annum (which just about beats inflation)
You need to invest a monthly amount in a growth asset like equity to create a significant corpus for your retirement.
Ideally, you should be saving about 10% of your monthly income towards your retirement corpus so that you have a significant chunk 20 to 30 years later.
Let’s say you are 25 years old and earn Rs 30,000 per month. If you invest Rs 2500 every month in SIPs, increasing it by 10% every year as your salary increases,  your savings can be anywhere between the amounts below:
  • Rs 4.12 crores when you turn 60 – This is at a balanced return of 12% per annum
  • Rs 7.2 crores when you turn 60 – This is at a slightly better return of 15% per annum
Wow, that’s quite a bit of money !
That’s what most folks think and assume that they won’t need such large sums so don’t start saving for retirement. However, not only will inflation drive up costs in the future, you are expected to live longer on account of better medical facilities so you will need money for a longer period of time.
Don’t wait for tomorrow to start investing for your Retirement. Start Today. 
I’m Govt approved financial advisor with keen interest in markets. So yes, I can help you  with Mutual Funds. Your dream of owning that swanky car or that huge bungalow has become easy now, thanks to SIP. Start investing as early as possible to get the best gains in the long run. Before I conclude, I do need to put this up, “Mutual Fund Investments are subject to Market risks, read the scheme related documents carefully before investing”
To Start An sip just Call or WhatsApp at


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