Skip to main content

Take SIP route of Investment during this volatile stock market

 

THE usefulness of a systematic investment plan (SIP) is clearly visible at regular time intervals. Often, it is during tough times, when one is able to appreciate the benefits that an SIP provides and how this can be effectively utilised by the investor to build a strong financial position.

Here is a look at some of the conditions when this route would be useful for making investments.

Large amount to invest: One situation that the individual has to encounter is where they have a large amount to invest but they actually are not very confident about investing the amount. This happens due to the fact the investor wants to ensure that there is a low initial risk present on their investment. There is a large risk in making a one-time investment, as a sudden change in the situation from the time the amount is invested, could result in a large loss that is unaffordable.

So, if a person has Rs 25 lakh to invest and they want to invest into equities, then they would not like to come to a situation, where, in a week, after they invested the amount, there is a loss of 10 per cent and they find that they have lost a sum of Rs 2.5 lakh. Instead, they would want to ensure that the amount is invested in such a manner that this kind of initial risk is minimised, which is where the usefulness of the SIP comes in.

Regular investment: The other thing that a lot of people want to ensure is that there is a regular investment over a period of time so that they are able to ensure that the financial planning process is successfully carried on.

When the regular investment is required, then they would want that there is some way by which they need not make calculations every month and direct the investment in a specific manner.

This will mean following the SIP process, where, for example, they are able to, say, that out of the savings of Rs 15,000 per month, Rs 8,000 a month will be invested into two equity-oriented funds. This will ensure that there is ease of completion of process, without having to undertake any tension once they have set up the entire investment structure.

Uncertainty about equity markets: The manner in which the individual selects the investments for the SIP is important, but there is also a situation where the individual faces an uncertain equity market. There will be occasions when the individual will not be clear about the manner in which the equity markets will move, and hence, they will be confused whether they should complete their investments immediately or wait for a better opportunity to emerge. In such a situation, when the manner of the movement of the markets is not clear, the individual would be better off in selecting an SIP route for the investment.

This could mean that there are a lot of times when the SIP would be the best route that would be present for the investment. The individual can save a lot of trouble by just going in for the SIP and leaving out the investment worries to the fund manager, rather than trying to understand very short-term movements in the equity markets and then finding out that they have been wrong in these predictions. It is nearly impossible to time the markets, and hence, investors would realise that they are better off using the simple SIP route and save a lot of worries.
 
Download Section 80CCF Tax Saving IDFC Infrastructure Bonds Application Form
 

Download Section 80CCF Tax Saving L&T Infrastructure Bonds Application Form
 
 
 
 

Popular posts from this blog

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...
Read more

WEALTH TAX

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 WEALTH TAX   WHAT CONSTITUTES WEALTH? For wealth tax purposes, "wealth" means property , urban land, car, jewellery , yacht, boat, aircraft and cash in hand in excess of Rs 50,000. CAUTION POINT | Do not think you will have an easy escape from wealth tax by transferring your `wealth' without consideration to your spouse or minor child. Such assets will also be considered as your wealth. HOW TO DETERMINE YOUR TAXABLE WEALTH Add the taxable value of the above assets (computed as per the detailed rules for valuation) owned by you as on March 31 (for FY 2014-15, it will be March 31, 2015). In case you sold your car during the year, it will not be taxable wealth. Deduct loans if any obtained by you to acquire any of the taxable assets from the value of gross tax out for at least 300 days in a...
Read more

Equity Savings Fund

Invest Equity Savings Fund Online   The best part about these funds is that they are subject to equity fund taxation and at the same time are structured like MIP like funds . This new category, equity savings funds , offer a little of everything. They allocate money to equities & equity related instruments, and fixed income. They aim to generate returns by diversification. Such funds invest in fixed income and arbitrage to protect the investors from short term volatility and equity for capital gains. The best part of these funds is that they are subject to equity fund taxation and at the same time are structured like MIP funds.   MIP funds however are subject to debt fund taxation. Investors Equity savings funds are suitable for the following: First time investors who seek partial exposure to equity with less volatility and greater stability Investors seeking moderate capital appreciation with relatively lower risk Those wh...
Read more

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...
Read more

8% Government of India Bonds quick guide

For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability. What are Government of India bonds Government of India bonds are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form onl...
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