× About Questionnaire Gallery What is SIP? Life Stage Goals Benefits of SIP Why is right SIP important?

About Sundaram Mutual

Sundaram Mutual, a major player in the fund management space with a retail focus, has an accomplished and acclaimed track record since it commenced business in 1996. The fund house currently has assets under management of about ₹39,658 crores as on October 31, 2019.

Sundaram Mutual offers a bouquet of fourteen equity and eleven fixed-income funds catering to diverse investor preferences.

The fund house has always strived to create innovative products that can add value in an investor’s wealth creation journey. Sundaram Mid Cap Fund, Sundaram Rural India Fund and more recently Sundaram Services Fund have been among the ‘first-of-its-kind’ schemes that we have launched. The brand has a strong retail focus with over 1.1 million active investors, and 93 branches across the country.

What is SIP?

A Systematic Investment Plan or SIP, is a flexible and convenient way to invest in mutual funds. SIP is an investment vehicle that allows an investor to invest a fixed amount in mutual funds on a regular basis (weekly, monthly, quarterly).

One can setup an SIP in three simple steps.

  • Choose the mutual fund scheme of their choice
  • Select the amount to be invested
  • Select the SIP date & the frequency (weekly, monthly, quarterly)

Once the setup is done money gets debited automatically from your bank periodically.

Life Stage Goals

While planning and investing are important to reach your goals, it is equally important to plan according to your life stages.

The Orientation Phase

You are in your early 20’s and you have just started a career. Goals in this stage would be to inculcate a savings habit, enhance financial literacy & start identifying your risk appetite & financial plan. As a practice, set aside 10-15% of your salary for savings & investing. For tax saving, you can consider investing in ELSS mutual funds through the SIP route. ELSS funds have proved to be superior tax saving instruments and also give you the benefit of capital appreciation.

The Exploration Phase

You are in your early 30’s and have gained a reasonable foothold in your career. Now you have a clear picture of your short, medium & long-term goals like setting up an emergency fund, buying a house, creating a retirement corpus, saving for your child’s education/marriage, etc. This is when you move to a goal-based investment approach. You can allocate your money in such a way that you setup different SIPs for different goals based on the investment horizon and your risk appetite. For e.g. SIP in a liquid fund for the emergency fund, SIP in a balanced fund or a large cap fund for medium term goals and a SIP in a mid / small cap fund for a longer term goal.

The Accumulation Phase

By this time you are in your 40’s. Now its time to reassess your investment strategy and to see if your SIPs are on track with your goals or if any reallocation is required. You may choose to reduce exposure to any high-risk investments that you may have, as you start moving closer to your retirement by the time you are in your late 40’s or early 50’s. You can introduce debt oriented asset allocation to bring a balance in your portfolio. This can be done by setting up fresh SIPs or a STP – systematic transfer plan from your existing investments.

The Disposition Phase

By now you have retired and accumulated the necessary corpus to support your lifestyle post retirement. At this stage your financial goals change from wealth creation to wealth preservation. You can review your asset allocation and move the money to funds with a shorter investment horizon or setup SWPs systematic withdrawal plans from your existing investments to augment your retirement income on a periodic basis.

Benefits of SIP

  • Convenient - SIPs are very simple and convenient to setup. All you have to do is pick a scheme, the amount you want to invest and the date. Money gets automatically debited periodically from your bank account.
  • Flexible – You start by investing as little as ₹100 and can pause, stop & resume your SIPs as per your convenience depending on your financial commitments. And all of this can be done online!
  • Inculcates Disciplined Investing - SIPs ensure that you invest regularly for your goals and get one step closer to them with every instalment.
  • Rupee cost averaging – SIPs provide the benefit of rupee cost averaging. This means that you are allotted more units of the mutual fund scheme when the Net Asset Value (NAV or the purchase price of each unit) falls and fewer units when the market rises. This ensures that the overall investment cost is averaged out and eliminates the need to time the market.
  • Power of compounding – One of the biggest benefits of early investing through SIPs is opportunity to leverage power of compounding. Power of compounding is like a snowball effect, that generates returns on your investments + the returns generated so far. This can lead to a significant corpus when invested for a really long-term.

Why is right SIP important?

Are your saving to your lifestyle?

One factor that is often ignored while charting out financial goals is a consistent improvement in lifestyle. As human beings, we are inherently averse to accepting change. This is more so the case when it is a scale down, instead of a scale up. For e.g. the kind of house that you may want to live in when you are 45 will be very different from when you are 25. Moreover, there will always be additional lifestyle expenses that come with age than you may think of as necessary now.

Retirement Planning

If there’s one activity that we all tend to postpone and defer, it’s retirement planning. Most of us tend to underestimate the perils of poor retirement planning or the lack of a meaningful corpus at the time of retirement. The key step in financial planning is estimating post-retirement expenses. One mistake that most people make in projecting cash-flow requirements post retirement is visualising a downsizing in lifestyle and consumption needs in post-retirement life. Consequently, they project lower ‘real cash’ flow needs. This is the biggest mistake most people tend to make. To arrive at a realistic retirement corpus, factor in lifestyle expenses, inflation, medical expenses and an emergency fund. Based on the above, back calculate and arrive at a number. Once you’ve done this, you can start investing towards achieving this goal.

Don’t time the market. Time in the market is important.

₹1 lakh invested in the Sensex since inception (April 1979) and stayed invested for all days until September 30, 2019, is worth ₹3.1 crore.

Making an investment for the long term can be rewarding since the impact of near-term volatility fades over time. Investing over a longer period helps promote savings and enables you to achieve your financial goals - be it buying a Car/House, spending on your Child’s Education, Marriage and Retirement, apart from Creating Wealth to meet your growing needs. Besides, by staying invested over a long period of time you can also benefit from sudden market rallies or certain “Best Days” in a year. The above is an illustration of how staying invested over a longer period of time would have helped build wealth for you through the power of compounding.


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