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Tuesday, December 20, 2011

The Power of Systematic Investment

A lot is said about savings and investments and we find many instruments to save our hard earned money. But the question is, are we investing in a proper way and are we able to beat the inflation with our investments and also creating wealth.

People have the habit of investing their hard earned money in traditional instruments like F.D's, NSC, Post office Savings, Bonds etc, because of the fear of loosing their money by investing it in risky instruments like Equities, Mutual Funds, Commodities etc,.

Today we have so many options to invest our money. A person who has a disciplined approach in investing his money can beat inflation and also make his money grow at a faster pace than investing it in fixed income instruments.

Systematic Investment Plan is the best way of investing in a disciplined manner in mutual funds to beat inflation and also create wealth in long term. To make you understand please find a simple example:

SYSTEMATIC INVESTMENT PLAN
Returns Calculator
Monthly Investment Amount Rs.  500 /-
Investment Period In Years 20
Returns Expected (% Annualised) 20.00%
End Value of your Investments
Rs.  12,38,097
Amount actually paid Rs.  1,20,000
Times amount gets rolled-over 10.32

A disciplined and systematic investment approach of investing just Rs.500/- every month in a diversified equity mutual fund gets rolled over 10.32 times in a span of 20 years on an expected annualised returns of 20%. This is called the power of Systematic Investment Plan.

Today, there are so many innovative products, the choice is of the investor how he wants to invest and which product suits his requirement.

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