Every Life Goal is a dream of yours that was conceived in your childhood and off late you started working to make it happen. At a time when inflation is going up, cost of living is becoming expensive, your daily life wants are exceeding your needs, what is slowly getting neglected and going into waiting bucket is the dreams you had seen and visualized for yourself few years back. Suppose 15 years back in 2009 when you were bachelor you dreamed to send your child to a boarding school 100 kms away from your place, in 2024 you have 5 year old son and this is the year of new IPhone launch may be changing your phone becomes a priority for you and you settle down for your child going to neighbourhood school within own city. Actually your wants keep changing your Goal Posts regularly.
If Life Goals are like a destination then your Saving Tools work as mode of travel to complete your journey. You need to be wise enough to choose your saving tools very smartly as they have the power to decide how fast or slow you reach your goals. The way train engines evolved from Steam Engines to Electric Engines and reduced travel time, you need to make a shift from traditional saving tools like RD/FD/NSC/Kitty Saving to SIP (Systematic Investment Plan)
SIP is the most modern tool of Investing in Mutual Funds that brings to you the Power of Compounding, Flexibility, Transparency, Technology Support and on top of it Tax Efficiency. SIP works as the fastest mode to make you reach your goals safer and faster. SIP operates in a automated way where in your Saving Account is linked with your Investment and a fixed amount is automatically deducted from your account on prefixed date.
You need to be highly disciplined and stay very strict to your Life Goals and they should not be too many, actually very selective few ones. They should make you happy, bring cheers to your life, elate your family status & name, remain matter of pride for each one in your close circle. Very common life goals remain Child Education (Schooling & Higher Education, Daughter/Son wedding, Planning your sweet home, Retirement Fund. These are like 4 pillars of your success and they should be planned and executed with utmost perfection.
Once you open a SIP, you actually open doors to prosperity by developing a discipline of regular savings. In modern times SIP is the only tool that has power to beat inflation as compared to money in your Saving Account/Post office RD/Life Insurance Policy/Your Kitty etc. When you take SIP route to invest in Mutual Funds, you get benefitted with futuristic approach of Fund Managers, Equity participation, diversified investment pattern and on top of it your little money starts participating into growing economy of country. SIP is the best route to accumulate units as your Investments gets benefitted from both Ups and Downs of market, while during market falls you accumulate more units at the same time when the market goes up your entire unit value goes up. This way your every rupee you save and invest through SIP yields far better returns as compared to various other modes. Suppose you have Rs. 5000 that is available for investment every month for next 15 yrs (Total Investment value is Rs. 9.0 Lakh) following will be return in 2039
Saving Account – 11.15 Lakh Post Office RD – 14.61 Lakh PPF – 16.08 Lakh Life Insurance – 12.86 Lakh Mutual Fund SIP – 25.22 Lakh* Friends Kitty – 11.37 lakh (All interest rates are actual as of date and mutual fund return is taken at an avg of 12%) Suppose you need to send your Daughter/Son for higher education in 2035, have a look what difference money in Saving Account or Money with SIP create for you, the difference is whopping Rs. 14.07 Lakh and thats real power of SIP
How much SIP is good enough – This entirely depends on your Goal, in some cases Rs. 10000/PM will be good enough for your daughter’s wedding taking place after 20 years if you wish to spend about 1.0 Cr, but if you are looking forward to a destination wedding that might cost about 1.50 Crores, you need a SIP of Rs. 15000/PM. Same way you need to calculate on Higher education cost, an Engineering Degree for a child in India after say 15 yrs might cost say 75 Lakh (you need a SIP of Rs. 15000 and same degree in a college abroad might cost say 1.25 Crore (You need a SIP of Rs. 22000/PM)
Can SIP amount be withdrawn earlier – Yes, SIP actually creates an emergency Fund for your needs, suppose if there is any sort of emergency in Family (accident, medical reasons or otherwise) you can immediately put redemption request and money can be credited into your account within max 3 working days.
Is SIP amount fixed for ever and what if I can’t pay for a short duration – SIP working is very flexible in nature, the amount can be increased or decreased depending upon your financial conditions. These days there is a SIP pause facility available where in you can stop paying for a short duration of your choice.
Where can I check my SIP statements – SIP working is highly technology supported. All SIP details are available on your mobile App, you can monitor, manage and do all transactions with click of a button sitting at home.
How can I start a SIP – All you need to take a start and open a SIP is get your KYC done by submitting your PAN+Aadhaar+Photograph+Account Details and generate a Folio. You need to take professional help or AMC support to get this done. Once done, there is no future documentation required, all future communications will happen over email as well as SMS/Whatsapp
First Step to SIP is, decide your long term Financial Goals, Put a value to your Goal keeping inflation in mind, Work out your Savings and start as low as you can. Take professional help and be on your journey to achieve your goals that bring to you and your family ultimate pride.
For more details on SIP and your personalized financial planning write us at 9501017769.kamal
We will be happy to assist you in your journey to meet your Financial Goals.
Kamal K Sharma is a Financial Professional associated with BSE (Bombay Stock Exchange) Institutes as a visiting Faculty and Author to the bestseller The Piggy Bank Billionaire.
