Skip to main content

Myths Arpound Systematic Investment Plans or SIPs

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

Mutual Fund SIPs

 

Here I would like to start this article by defining “What Is A Myth”. A myth is a story which may or may not be true. It is generally old and its conclusions might have been lost in time. However in general a myth is a story whose conclusion is taken for granted without checking it. Many a time the wrong conclusions are drawn. “He Who Must Catch Fish Must Not Mind Getting Wet” This basically means that in order to succeed in our systematic investment plans we need to demystify the myths. Only then can we make an informed decision in order to invest in a Systematic Investment Plan

 

I Can Do It Alone I Don’t Need Any Help:

Here many people try to do an SIP in a single stock; An SIP is done in an Equity Diversified Mutual Fund which is a portfolio or basically a collection of a number of stocks in different sectors. We cannot do an SIP in a single stock. But I will stick only to Blue Chip Stocks? However good a stock is it is too risky to put all your eggs in one basket. Many companies perform well for about 3 years and some of them become a part of the major Index like the BSE Sensex. A certain major Infrastructure company was once part of the BSE Sensex but now it no longer is part of the Sensex. If we look at the power sector we find all the major power Companies languishing in the doldrums. This is mainly because of lack of coal supply .Imagine if we had taken a bet in a single major Power company or for that matter a major Telecom Company which is shaken up due to the 2G scam. What would be our state? Everyone is wise after a bitter experience but a wise man learns from other’s mistakes.

SIP Is Only For Small Investors And Salaried Guys:

Here SIP is a concept or a technique and does not depend on the sums of money invested. Here many people believe that an SIP is only for small investors who want to save for a rainy day. Do you think this is true? Here an SIP does not depend on the sums invested. An HNI might invest INR 500000 per month in an SIP and a salaried man say INR 5000 per month. Here we see that both of them are making use of the SIP albeit for different amounts. Here a man becomes rich not by doing things differently but by following the basic rules and doing the right things. Remember the piggy bank we all had in our school days. This is basically an SIP without a rate of return.

Isn’t SIP A Fund Or A Scheme:

Here you might have heard many people ask “What Is the NAV of my SIP? Here people forget that SIP is a tool or a technique to invest in the stock market. It is not a mutual fund and does not have an NAV value. Here this is a technique to invest in a particularly good mutual fund.

SIP Should Always Be Done Timing The Market:

Here people state that we should start an SIP when the markets are low and exit when the markets are high. How does one come to know when the markets are high and when the markets are low? Who could predict the highs of the stock market in 2007 or for that matter the stock market crash of 2008 due to the USA Subprime lending crisis. The very basis of an SIP is to stay invested in the market irrespective of the ride. Here the ride could be smooth, choppy or outright Stormy. “Remember Caution Is The Parent Of Safety”.

SIP Is The Cure For All Diseases:

Here many people believe that SIP is a magic wand that can skyrocket the returns on our investments .Don’t these SIP’s give us great returns over a 5 year term period? .Here one needs to be wise and prudent while demanding returns from these funds. No one can predict market crashes and if we had started our SIP in the Year 2007, what would be the value of our SIP’s in December 2008. Here in an SIP we have to plan the mutual fund scheme, time horizon and the period of investment. Here we obtain lesser units of a mutual fund when the market is rising due to rise in NAV and higher number of units in a falling market due to a lesser value of an NAV. Unfortunately most of the people close up the SIP in a falling market taking up great losses.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief ‘96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...
Read more

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...
Read more

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...
Read more

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...
Read more

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now