The Power of a Systematic Investment Plan (SIP)

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It's December, 2008.

You have a good job that pays you a good salary , with a CTC of Rs. 50,000 per month.

The Nifty has crossed 3000, and the global meltdown that caused the markets to crash seems to be making a revival.

What do you do?

Compound Interest: the Magical Savior

You have a family with two kids, a wife, your parents, and are the sole bread earner of your family. You want to ensure that you family will be taken care of for the rest of their lives.

You speak to your financial adviser, and you decide to set aside funds in a systematic way, month by month, into a SIP- a Systematic Investment Plan. Each month, you will set aside Rs. 5000 from your salary- that is, 10% of your salary- into the SIP. The SIP is setup in such a way that you are only investing in a Large Cap Mutual Funds, made up of heavyweights that make up the Sensex.

Fast forward to the future. In 6 years, by simply having invested Rs. 5000 into the SIP on a monthly basis, you would have approximately 4.5 lakhs in your account.

That is the power of a well thought out plan of action.

Happy Investing 🙂

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