Systematic Investment Plan

January 11, 2011   ·   0 Comments

: Systematic Investment Plan

www.stockssavvy.comThis is the one of the Finest method of Saving. Imagine today if I tell you that Save 1000 Rs. Every Month, n at the End of 30 Years, you will get back more than 2 Crore Rs. Saving it an Interest of 30% per annum. You will not believe me. But believe me, This is really possible.

The amount Invested at the End of 30 Years will Come out to be 3,60,000 Rs if you save 1000 Rs per Month. (1 Year=12,000 Rs, 30 Years=3,60,000 Rs.) and STATS shows if you are getting an Interest Rate of 30 %, you will end up making that 3 Lac 60 Thousand in 2 Crores 33 Lacs.

Refer to the Given Below Chart where if you save 1000 Rs. Per Month, with Different Interest Rates How much you will end up in Different Years with Different Percentage Returns.

Saving 1000 Rs. 

Returns Percentage/Years 3 Years 5 Years 10 Years 20 Years 30 Years
10 % 42,130 78,082 2,06,552 7,65,696 22,79,395
15 % 45,679 89,681 2,78,657 15,15,954 70,09,820
20 % 49,600 1,03,454 3,82,363 31,61,479 2,33,60,800

How to read the Chart? If you save 1000 Rs. In 3 Years. The amount Your are going to save at 3 Years with 20 % Returns is 45,679.

Refer to the Given Below Chart where if you save 5000 Rs. Per Month, with Different Interest Rates How much you will end up in Different Years with Different Percentage Returns.

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Saving 5000 Rs.

Return %age/Years 3 Years 5 Years 10 Years 20 Years 30 Years
10 % 2,10,650 3,90,411 10,32,760 38,28,484 1,13,96,626
15 % 2,28,397 4,48,407 13,93,286 75,79,774 3,50,49,103
20 % 2,48,004 5,17,27 19,11,817 1,58,07,396 11,68,04,008

So what do we observe from here. There are 2 Interesting Observations from here:

1)      Power of Compounding is really awesome. How saving as less as 1000 Rs. Can be converted to 1 Crore is actually difficult to understand. Just Remember the Thumb Rule: If you get interest as 23% per annum. In Three Years, you will double your money.

2)      See the Difference is the Shift in the Money Between 20 Years & 30 Years & 10 & 20 Years. Between 10- 20 years, Difference comes out to be 28 Lac Rs. However from 20-30 Years it comes out to be a Whopping 2 Crores, 2 Lac Rs. This Justifies Early you start, the more your are going to End up.

Whoever is reading this page, I am pretty sure that it wont be impossible for you to start saving 1,000 Rs. Per month.

Now a million Dollar Question Comes: How am I going to get 20-30 % Interest Rate per Annum when a Normal FD yields me not more than 8-10 %. Is it feasible to Get Such Interest Rates?????

The Answer to all these Questions is MUTUAL FUNDS. Don’t Believe me.. Check out the Returns of some Mutual Funds which I have compared for you:

Remember I am writing for awareness & I will get no benefit from any of the Companies here.

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 SIP Returns of Some Good Mutual Funds: 

Sr. No. Name of Fund No. of Years(3) No. of Years(5) No. of Years(7)
1) HDFC Tax Saver Fund(D) 29 % 39.4 % 38 %
2) Birla Sun Life Tax Plan(D) 21 % 35 % 22 %
3) SBI Magnum Tax Gain 31.7 % 43.16 % 18.79 %
4) Reliance Growth Fund(D) 17.5 % 31.09 % 45.88 %

 How Much Money will it have made if you would have Started Investing 1000 Rs. Per month in these Respective Mutual Funds:

Amount:

Sr. No. Name of Fund No. of Years(3) No. of Years(5)
1) HDFC Top 200 (G) 60,865 1,20,675
HDFC Top 200 (D) 51,520 89,228
2) Reliance Equity (G) 44,864
Reliance Equity (D) 44,864
3) Reliance Growth (G) 58,703 1,16,157
Reliance Growth (D) 49,564s 80,902
4) Reliance Tax Saver (G) – ELSS 59,120 1,05,118
Reliance Tax Saver(D) – ELSS 54,269 90,796
5) HDFC Tax Saver (D) – ELSS 50,105 61,112
HDFC Tax Saver (G) – ELSS 78,895 1,10,385
6) Reliance Equity Opportunity(G) 65,162 1,18,951
Reliance Equity Opportunity(D) 59,343 99,215
7) Reliance Long Term Equity (G) 59,360
Reliance Long Term Equity (D) 59,360
8) Birla Sun Life Tax Relief 96 (D) 43,136 70,852
9) HDFC Equity Fund (D) 54,924 91,315
HDFC Equity Fund (G) 66,520 1,24,472
10) SBI Magnum Umbrella (G) 60,602 1,01,442
SBI Magnum Umbrella (D) 52,448 81,410

 Note: Consider the Amount which is in Growth. We don’t know how much these Companies have given the Money as Dividend. As there will be variance in the Dividend Rate as well as Money Given as Dividend, it will be advisable to compare Mutual Funds on the Growth Prospect where every money given as Dividend is Reinvested in.

The Numbers are Staggering. I am talking 49,000 Rs. at the end of 3 Years with 30 % Return. Here Some of these Mutual Funds have even Surpassed that.

At the End of Lesson, what you have learnt? How Systematic Investment Plan are going to help us achieve our Financial Goals. Get your Financial Goals Set up with you like by the end of 5 years, I need to buy a Car(Put the name the Brand Name to be more Specific) & see how much you need to save per Month in order to Achieve that Goal.

In Chapters to come, I am going to Compare Different Mutual Funds of Different Kinds who will help you in achieving your Different Financial Goals & for their Performance.

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Even Adding Comments/Views/Questions will be really appreciated.

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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