Achieve your big dreams with small savings

Written on Saturday, September 5, 2015
By Vishwajeet Parashar- Senior VP & Group Head - Marketing, Bajaj Capital Ltd.

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We all have certain aspirations which often are our financial goals too. As a common man we give our best to fulfill them, we succeed if we have the right approach and fail assuming our aspirations are too big for our savings. But remember, slow and steady wins the race. Well, it is not some philosophy which this blog aims to throw; it is simply to make you realize that 'slow' is nothing to worry, what's important is to be 'steady'. Let me introduce you to the concept of SIP (Systematic Investment Plan). You probably know this term through TV commercials, news stories and other promotional activities going around. If not, continue reading to know how SIP will transform your small savings to something significant.

To accumulate wealth you would have to develop habit of saving, initiate investment process, choose schemes that are less risky, save your money from market risks, hunt for investment options to fit your budget and of course it has to be convenient, right? If you are a first time investor reading this, I can imagine an OMG expression on your face but let me change your expression. If I tell you all these things can be covered under a single option, you have to believe me as SIP does all these things just the way you want. A Systematic Investment Plan (SIP) is an investment model that allows you to invest fixed amounts of money at regular monthly intervals in a mutual fund Scheme for a continuous pre-defined period.

This is how it would help you accumulate wealth over a period of time, helping you fulfill your aspirations.

-It inculcates a disciplined investment approach that builds a habit of saving. Most of us are habitual of delaying investment planning process and this will result in our savings being postponed to a later date. Breaking this habit, SIP offers options to invest small amount on a regular basis instead of lump sum investment. SIP teaches disciplined investment not only by making you invest regularly but also by making you invest early rather than postponing your investment till the point you accumulate a sizeable amount.

-SIP gives your investment an advantage of rupee cost averaging. That means, you can buy more units when the market is down and fewer units when the market is high. This results in averaging the cost per unit which may lead to gains arising out of market volatility.

-It definitely helps you to avoid sentiment driven investment. As you are investing a fixed amount every month, it prevents you from investing large sums when market is performing well.

-Here, investment is something that matters not the amount. You can start with as low as 500 or 1000 without putting extra burden on your financial life.

-There is nothing as convenient as doing a SIP. You have the choice of electronic clearance, so that you don't have to pay checks every month and the amount automatically gets deducted from your bank account every month.

Now coming back to your dreams, suppose you want to buy a house in the year 2040, if you start a SIP of 5000 today, you would have 5900824 at the rate of 10 percent. Similarly, it would work for your other goals too. You want to buy a car in 2020, start a SIP of say 10000 for this goal, as it is a short term goal so you would need more amount. In 2020 when you will withdraw this amount it would be 7,32,612.

You can try calculating your other goals with the help of SIP Calculator available on our website.

#Mutual Fund Investment is subject to market risk, please read the scheme document carefully before investing. 

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