Know More

Systematic Investment Plan (SIP)?

A Systematic Investment Plan Or SIP is a smart and hassle free mode for investing money in mutual funds. It helps you to create wealth, by investing small sums of money at specified intervals, over a period of time instead of a heavy one-time investment.

A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth by investing an amount as low as Rs. 500 monthly. investing at an early stage of life lets you enjoy the benefits of two powerful strategies, rupee cost averaging and the power of compounding.

SIP allows you to buy units on a specified date every month, so that you can implement a saving plan for yourself. The benefits of this can be enjoyed as and when the need arises for occasion, buying a house or a car etc. and above all, retirement.

Benefits of SIP

It’s the key to investing success. Regular investment makes you disciplined in your savings and also leads to wealth accumulation. Systematic investing is a time-tested discipline that makes it easy to invest automatically. Investing regularly in small amounts can often lead to better results than investing in a lump sum.

  • Timing the markets may or may not work but SIP always works

Source: MOAMC internal research. Disclaimer: The above graph is an illustration of a stated example and not actual performance of any scheme. the above is for representation purpose only and should not used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.

Month 1 Month 2 Month 3 Month 4 Month 5 Lumpsum
Amount 10,000 10,000 10,000 10,000 10,000 50,000
Nav 25 20 22 24 27 25
Units 400 500 455 417 370 2000
Cumulative Units 400 900 1355 1771 2142 2000
Average Cost NA 22.5 22.3 22.8 23.6 25
  • Benefit from volatility: More units when markets fall; higher value when markets rise
  • Over long term, the cost of investing averages out

Source: MOAMC internal research. Disclaimer: The above table is an illustration of a stated example and not actual performance of any scheme. the above is for representation purpose only and should not used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.

Linear increase in the number of years invested, exponential increase in wealth generated

Year Rate
10% 15% 20% 25% 30% 40%
3 1.3 1.5 1.7 2.0 2.2 2.7
5 1.6 2 2.5 3.1 3.7 5.4
10 2.6 4 6.2 9.3 14 29
15 4.2 8.1 15 28 51 156
20 6.7 16 38 87 190 837
25 11 33 95 265 706 4,500
30 17 66 237 808 2,620 24,201

The difference between 10 and 30 years is not 3x, but 16.5x!

The difference between 10 and 30 years is not 3x, but 87x!

Source: MOAMC internal research. Lumpsum investment growth over years with different rates of interest. Disclaimer: The above table is an illustration of a stated example and not actual performance of any scheme. the above is for representation purpose only and should not used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.

Benefits of starting early

SIP in Sensex Early Starter Late Starter Early Starter Late Starter
Amount Invested 10,000 20,000 10,000 20,000
Date of Investment 1-Jan-00 1-Jan-10 1-Jan-1990 1-Jan-2005
No. SIP Instalments 247 127 367 187
Total Amount Invested 25 lakhs 25 lakhs 37 lakhs 37 lakhs
Value of Investment (as on 1-Aug-20) 91.6 Lakhs 37.3 Lakhs 272 Lakhs 75 Lakhs
XIRR 11.4% 7.0% 11.0% 8.3%
Cost of Delay 54.3 Lakhs 197 Lakhs
  • By starting early, the Investor’s wealth grew 3 x times that of the Late Starter
  • Make Compounding work for you : Starting early even with a small amount goes a long way

Source: MOAMC internal research. Disclaimer: The above table is an illustration of a stated example and is the actual performance of Sensex. The above is for representation purpose only and should not used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.

5 ways to achieve your financial goals

Be aware of inflation as inflation erodes wealth and purchasing power silently

  • Be aware of inflation as inflation erodes wealth and purchasing power silently

Source: Internal MOAMC Research. Inflation rate assumed at 6% Disclaimer: The above graph is an illustration of a stated example and not actual performance of any scheme. the above is for representation purpose only and should not used for development or implementation of an investment strategy. Past performance may or may not be sustained in future. * Over periods of time -