EMI = GOOD EMI =

Instalment Investment

SIP or Systematic Investment Plan

offered by Mutual Funds is like a GOOD EMI
WHAT are SIPs?
SYSTEMATIC INVESTMENT PLANS (SIPs)
MADE SIMPLE

WHAT are SIPs?

WHY SIPs?
WHERE to invest via SIPs?
WHEN to start an SIP?
WHAT not to do in SIPs
WHAT are SIPs?

ŸA REGULAR AND DISCIPLINED way of investing

in Mutual Funds

Ÿ INVESTING PROCESS
similar to a Bank Recurring Deposit
- Regular investment in one or multiple schemes

Ÿ ONE OF THE BETTER WAYS TO INVEST IN A

MUTUAL FUND
WHY SIPs?

Ÿ CHEAPER ON THE WALLET

- Invest as little as R 500 per month

Ÿ REGULAR AND DISCIPLINED INVESTMENT

Ÿ Potential To CREATE WEALTH OVER THE

LONG TERM

Ÿ MAKES MARKET TIMING IRRELEVANT

- Ensures that one invests at all points of time (high as well as low points of the market)
- Benefit from Rupee Cost Averaging

Ÿ BENEFITS OF POWER OF COMPOUNDING

Let us look at some of the above aspects in detail…..

WHY SIPs?

CREATE WEALTH
OVER THE LONG
TERM
Create Wealth Over The Long Term
(Illustration)

An SIP^ of R1000 per month growing @ 10%, 12% & 14% p.a.*

Final Value Final Value Final Value

Principal
Period R lac R lac R lac
R lac
@ 10% p.a. @ 12% p.a. @ 14% p.a.

10 years 1.20 2.07 2.32 2.62

15 years 1.80 4.18 5.05 6.13

20 years 2.40 7.66 9.99 13.16

25 years 3.00 9.57 13.38 27.27

A small difference of even 2% in returns can change the final amount significantly

* For Illustration purposes only. These are assumed returns and actual returns may vary. Also, returns may vary with the type of underlying asset class.
^ Systematic Investment Plan at the beginning of the month.
RUPEE COST
AVERAGING
Rupee Cost Averaging

Receive more units when NAV is lower,

and lesser units when NAV is higher

Investment (A) NAV (B) No. of Units (A / B) Remarks

R 10000 20 500 Higher NAV ~ Less Units
R 10000 16 625 Lower NAV ~ More Units
Average Cost per unit 17.78

− The cost is thus averaged out as NAV falls

• Longer the SIP period, better the impact of rupee cost averaging
• Longer SIP periods may also help lower volatility of returns
Rupee Cost Averaging (Illustration)

How cost per unit has dropped over 6

2 01 3
,
long investment horizon r 31 .652
35,000 n Ma ly Rs Ending Value

2 o as on
25,342
4
2 53 d w
30,000
6 to erio
1 99 ear p
, y
25,000 r 31 20-
n Ma r the
o ve
67 nit o
Sensex Value

20,000
3 3
o m au
fr t of
s
15,000 r ose e co
x g
nse vera
S&P BSE Sensex

Starting Value
e
S TA
BU
10,000 3367

5,000 Average Value

6523

0
6

8
4

6
9

4
5

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8
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ar

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-M

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31

31

31

31

31

31
31

31

31

31

31
31

31

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31
31

31

31
31

Past performance may or may not be sustained in future.

For a 20-year SIP in S&P BSE Sensex ending on March 31, 2016. Investment at the start of the month
Source-CRISIL Mutual Fund Research Tool
BENEFITS OF
COMPOUNDING
Benefits of Compounding (Illustration)

The longer you stay invested,

the higher the potential for growth
SIP of R 1000 per month growing @12% p.a.*
Experience the Magic of COMPOUNDING
Principal Final Value Growth of Principal
Period
R lac R lac (Compounding Effect)
10 years 1.20 2.32 almost 2 times

15 years 1.80 5.05 almost 3 times

20 years 2.40 9.99 over 4 times

25 years 3.00 18.98 over 6 times

* For Illustration purposes only. These are assumed returns and actual returns may vary. Monthly investment at the beginning of the month.
WHERE to invest via SIPs?

NO RESTRICTION OF ANY ASSET CLASS

for commencing a SIP

MORE POPULAR FOR EQUITY as an asset class because…

− The asset class is relatively more volatile and
− SIPs help to even out volatility by purchases made across market cycles

EQUITY SIPs ideally should be long term

for 5 years and above

SIPs IN FIXED INCOME

may be for short to medium term
Three Modes to Invest

INTERMEDIARY
ONLINE FUND HOUSE
Bank, Distributor,
through and its
Independent
investment portals* Points of Presence
Financial Advisor (IFA)
* of Fund House/ Distributors

The first step is

to have your KYC
(Know Your Customer) done

KYC form available with Mutual Fund, distributors,

RTA or KRA (KYC Registration Agency)
WHEN to start an SIP?
WHEN to start an SIP?

NO PARTICULAR TIME TO START AN SIP

- Regularity and consistency is more important than timing
- SIPs actually make market timing irrelevant

FREQUENCY OF SIPS
is typically monthly or quarterly
- Monthly SIPs are more popular
- SIP date needs to be predefined
WHAT not to do in SIPs (Illustration)

Do not delay or discontinue your SIP

Target of R 1 crore at Age 60 @12% p.a.*
Start Age Monthly Investment R
Start Early
25 years 1,540

30 years 2,833

35 years 5,270
Every 5 Year Delay
40 years 10,009
Doubles rhe Monthly
45 years 19,819 Investment needed
Only R 1,540 p.m. needed if you start at 25 years
but R 2,833 p.m. if you start 5 years later and so on
* For Illustration purposes only. These are assumed returns and actual returns may vary. Monthly investment at the beginning of the month.
Start your
GOOD EMI
today!
Disclaimer

Information contained in this presentation is not a complete representation of every material fact and is for informational
purposes only. It cannot be used or considered to be an offer to sell or buy units of Franklin Templeton Mutual Fund
schemes. The recipient is advised to consult his/her advisor/ tax consultant prior to arriving at any investment decision.

An investor education and awareness initiative by Franklin Templeton Mutual Fund.

For more information,

Visit www.thegoodemi.com

Franklin Templeton Asset Management (India) Pvt. Ltd.

Indiabulls Finance Centre, Tower 2, 12th and 13th floor, Senapati Bapat Marg, Elphinstone (W), Mumbai 400013
Tel (91-22) 6751 9100 • Fax (91-22) 6639 1281 • www.franklintempletonindia.com

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.