In a market where the unit price is falling, SIP reduces the losses. As can be seen in the
example above, the market value of John’s portfolio in June would be 126.21*Rs. 42=Rs.
5300.82. However, if he would have invested the entire amount (Rs. 6000) in January itself,
then the value of the portfolio would have been Rs. 4666.67 (No. of units purchased @ Rs.
54=111.11; Market value of portfolio in June=111.11*Rs. 42=Rs, 4666.67)
You might have heard this bit of advice from a lot of investment advisors: START EARLY! The
reason why this is suggested is to ensure that you benefit from the power of compounding. If
you start investing early, then you can earn much higher returns by investing a small amount
as compared to someone who starts late but invests a higher amount. SIP allows young
professionals to start investing with smaller amounts and benefit from the power of
Ease of Investment
Another benefit of investing through a systematic investment plan is that you can invest a
fixed amount every month without any hassles. All you need to do is set up a one-time
instruction to your bank to allow auto-debit of the investment amount from your
savings/current account and forget about it.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.moneyfront.in. This article has been provided by ICICI Prudential AMC.