SIP, Systematic Investment Plan, Mutual Fund SIP, SIP India

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Systematic
Investment Plan
(SIP)

Systematic Investment Plan (SIP)

"WE WORK HARD TO EARN MONEY�
DO WE MAKE OUR MONEY WORK EQUALLY HARDER? "

Discipline comes once we start facing responsibilities. We are normally disciplined towards our expenses. However, we are not sure how to cull out required amount towards saving to meet our larger financial goals / expenditure.

Expenses we incur

Ongoing expenses: are not huge and the estimates of such expenses are generally known. Such ongoing expenses are telephone bills, petrol expenses, etc. Apart from this we also spend on movies, dining, etc, to fulfill our little joys. A little plan to have control over these expenses can contribute substantially to our savings.

Medium to long term expenses: These are larger expenses which cannot be accumulated in one shot but require regular accumulation over a period of time. Such expenses are higher education, buying a car, buying a house, marriage, etc.

How to balance between meeting ongoing and medium to long term expenses?

The answer is to save some little money regularly to meet your medium to long term needs. And yes don't keep it idle. Let that money also to work for you.

Why your money should work for you?

Some upsetting facts:

Inflation robs your purchasing power

Assuming inflation @ 6% p.a.)

What you can buy in Rs. 1 lac today will require over Rs. 5.74 lacs 30 years hence.

Value of Rs. 1 lac over time

�LET YOUR MONEY WORK TOWARDS BEATING INFLATION�

Save a small contribution regularly in proper investment avenue to meet those big expenses. How?

Power of compounding(an illustration)

Rs. 1000/- saved every month	Value after 10 years	Value after 20 years
Assumed Growth Rate	Value after 10 years	Value after 20 years
8%	182,946	589,020
10%	204,845	759,369
12%	230,039	989,255
14%	259,069	1,301,166
Source : Internal

The wealth creation formula:
FV = PV (1 + r)n
1. FV = Future Value
2. PV = Present Value
3. r = Rate of Return/ Coupon Rate
4. n = No. of compounding periods

�THAT'S THE POWER OF COMPOUNDING�

Where to save?

Cumulative annualized returns of different asset classes

Growth
Real Growth (Growth-Inflation)
1998-2008

�INVESTING IN EQUITY FUNDS MAKE MORE SENSE�

Investing in equities through mutual fund route

The advantages of investing in a Mutual Fund are:

	Professional Management		Liquidity
	Diversification		Transparency
	Convenient Administration		Flexibility
	Return Potential		Tax benefits
	Low Costs		Well regulated

Systematic Investment Plan

Simply means investing 'Fixed Amount' every month

Advantages of Systematic Investment Planning

Encourages Regular Investments (just like recurring deposit schemes)

A Convenient way to invest regularly

Lower initial investment without cutting into regular expenses

Long term perspective

Rupee Cost Averaging Benefit to counter volatility - it brings down the average cost of your Investments

No worries with timing the market

Meet investment objective with investment needs

Helps to match the risk / return profile

Rupee Cost averaging at work

SIP investment on 5th of every month for the period Sep �08 to Aug �09

SIP amount per month: Rs. 1,000/-

Particulars	DBS Chola Opportunities Fund	DBS Chola Midcap Fund	DBS Chola Growth Fund	DBS Chola Tax Saver Fund
SIP investment: Rs.12,000/- invested in 12 installments
Average cost per unit for SIP	23.79	48.86	41.61	8.82
Total units allotted (A)	504.43	625.05	524.86	1359.94
Single investment of Rs. 12,000/-
Applicable NAV: Average of the 12 NAVs of SIP dates	25.49	20.47	24.03	9.34
Total units allotted (B)	470.87	586.34	499.34	1284.92
How SIP is better than Single investment
Gain in number of units through SIP (A - B)	33.57	38.70	25.52	75.03
% Gain in units through SIP	7.13%	6.60%	5.11%	5.84%

Past performance may or ay not be sustained in future
Source: Internal

Finally, remember Golden rules of investing

Recognize Needs � Guided by objectives

Start Early

Invest Regularly & Systematically � Discipline rather than brilliance

Average cost of Investment � The Golden Rule

	Nature and Investment objective: DBS Chola Opportunities Fund: An Open-ended Growth fund. The Scheme will invest mainly to generate long-term capital appreciation from a diversified portfolio of equity & equity related securities.


	DBS Chola Growth Fund: An Open-ended Growth fund. The Scheme primarily seeks to generate long term capital appreciation income through investments in equity and equity related instruments; the secondary objective is to generate some current income and distribute dividend

	DBS Chola Midcap Fund: An open-ended equity fund. Investment objective is to generate capital appreciation by investing primarily in midcap stocks.

	DBS Chola Tax Saver Fund: An equity linked saving fund. To provide long term capital appreciation by investing predominantly in equity and equity related instruments and also enabling investor to get income tax rebate as per the prevailing Tax Laws and subject to applicable conditions.


	Risk Factors: � All investments in Mutual Funds and Securities are subject to market risks and the NAV of the Schemes may go up or down, depending upon the factors and forces affecting the securities market. � There cannot be any assurance that the Schemes' Investment Objectives can be achieved. � The past Performance of the AMC, Mutual Fund, the Sponsor or its Group affiliation is not indicative of the future Performance of the Schemes. � The Schemes does not guarantee any assured returns to the investors. � Investors are requested to refer to the offer document / scheme information document of the respective scheme carefully before making any investments.






	Statutory Details: DBS Chola Mutual Fund has been established as a trust under the Indian Trust Act, 1882 by Cholamandalam DBS Finance Limited (liability restricted to the seed corpus of Rs. 1 lakh) with DBS Cholamandalam Trustees Ltd. as the Trustee and DBS Cholamandalam Asset Management Limited as the Investment Manager.

Disclaimer

Risk Factor