Gulp Down The SIPs For The Wealth Growth

Khyati Shah

Khyati Shah is a Chartered Financial Analyst with over sixteen years of experience in the financial sector, lending her expertise to renowned organisations including ICICI Bank, CRISIL and National Stock Exchange. Currently Deputy General Manager at The Bombay Stock Exchange, managing a part of the Listing Business, Khyati’s expertise lies in developing new products and is engaged in setting up a unique platform for Start-ups. With ‘Savings’ as her guiding philosophy towards wealth management, Khyati exclusively shares with Parsi Times the importance of SIPs, as an integral and indispensible policy to be adopted by all who wish to enhance their saving plans and watch their wealth grow.

Savings is a habit. An SIP (Systematic Investment Plan) is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future. It is a smart and hassle-free mode for investing money in Mutual Funds, as it allows you to invest a certain pre-determined amount at regular intervals (weekly, monthly, quarterly, etc) based on your financial convenience.

Timing the Market v/s Time-in-the-Market:

For all the glorious stories of people making millions by trading in the stock market, the truth is that a very small percentage of professionals are able to time the market- i.e, buy low and sell high.  For most others, a more disciplined and sustained approach works better. An SIP means a fixed sum of money will be auto-debited from the bank account on a fixed date, as decided at the time of signing up, for the scheme. After that the individual does not have to worry about remembering dates, signing cheques, choosing from the myriad investing options and so on, on a regular basis.

An SIP means ‘Rupee-cost averaging’, which saves you from the stress of a guessing game. Since you are a regular investor, your money fetches more units when the price is low and lesser units when the price is high. During volatile periods, it allows you a lower average cost per unit.

Access to an otherwise expensive asset class for retail investors:

An SIP can be as low as Rs.500/- per month! Effectively, it allows a small investor to have stake in blue chip securities with a very small investment budget. A retail investor cannot hope to hold stocks of say, 40 companies in his personal portfolio, nor will he have the ability to manage such a portfolio in terms of tracking progress, buy-sell decisions, etc. An SIP managed by a professional, makes this possible. It helps the investor to gradually build wealth.

Life Goal based Asset Allocation:

An SIP is the best way to achieve certain short term and long term goals. SIPs can be equity or debt oriented.Typically, for longer term goals, an investor may invest in equity oriented plans, which provide growth over a period of time. For goals which are more near term, i.e. less than 3 years, a debt oriented plan will be more predictable. To explain it better, let us say you need to plan for paying fees for your child’s education in a foreign university after two years. Instead of having to collect a lump sum at one time, you can start accumulating through an SIP over several months and meet your goal without strain on financials.

BSE, Asia’s first stock exchange, launched BSE StAR MF platform in 2009, which allows Mutual Fund Distributors (MFDs) to purchase and redeem mutual fund units on behalf of their clients. The platform has led to improved transparency for the customers, reduced paperwork and helped in efficiently and effectively addressing customer servicing issues. There are several Mutual Funds in India offering a variety of schemes – across equity, debt, hybrid, etc. Chose a plan carefully based on your needs.

Happy savings! Happy Wealth-Building!


Leave a Reply