How SIP in mutual funds can make you a double Crorepati

Systematic Investment Plan as the name suggest is one of the most systematic way to invest indirectly in equity markets at regular intervals that may be daily, monthly or quarterly.
For Example: If Arun has started off a SIP of Rs 5000, it means every month Rs 5000 gets deducted from his bank account and gets invested in a mutual fund scheme selected by him on a given particular day of the month


What are advantages of investing through SIP in Mutual Funds which takes you to become a Crorepati


There are two advantages of investing in mutual funds through SIP. Rupee Cost Averaging and Power of Compounding


Power Of Compounding
Let me explain this with the help of example. Suppose Abhishek started a SIP in Mutual funds in one of the best equity diversified funds of Rs 5000 in 2001. This means his total investment till December 2010 (a total of 120 installments) works out at Rs 6,00,000. As most of the mutual funds have given more than 16% returns from 2001, his wealth would have grown to around 18,00,000 in 2010 and if Abhishek doesnt invest more and stop his SIP at this time, after 10 years, he can expect his money to be around 90,00,000 (90 Lakhs),. nearly becoming a Crorepati assuming 18% returns in the next 10 years which is possible by right selection of mutual funds and monitoring it year after year. This is done with a investment of just Rs 5000 per month for 10 years i.e Rs 600000 of total investment.


Rupee Cost Averaging
Rupee Cost Averaging is the process of buying mutual funds where you are a buyer at each level of market i.e at higher levels of market and at lower levels also. The mutual fund units purchased at lower levels gives you a chance to average out your investment at lower price and thus get significant returns. Mind you, even a 2% annualised returns can make a big difference to your mutual fund portfolio


Never under estimate the power of compounding. Invest systematically and become a double Crorepati by investing in mutual funds through SIP.


If you like this article, you may also read

• SIP in Mutual Funds is the best
• Rupee Cost Averaging takes you to become a Crorepati
• Dont Trade but Invest for Simple reasons

Why do you need a good financial planner

What is financial planning as a concept?

Financial Planning in simple words means planning your finances in such a way that you are able to invest your income in the right direction and thus create long term wealth and managing your finances in a way which helps you to meet financial goals like Child education, daughter marriage and retirement planning.

When do you need a financial plan?

A lot of people think that there are just in late 20’s or early 30’s, why do they need to think about future which is going to come after 15-20 years. Well, planning for finances in advance also helps in creating wealth and meeting long term financial goals. So the best time to review your financial plan is today

Why do you need a financial Planner

You need a financial planner because of the following reasons

1. Updated with all financial products

Every person is the master oh his trade, and so is financial planner who will assess your requirement and suggest you the best suitable financial product to you. Spending money on buying insurance or mutual funds doesn’t help you in meeting long term financial goals, but along with it, proper planning is required. You need a financial planner who will analyse your risk profie, your current income and finally fit you the best term plan or mutual fund or fixed deposit as per your need.

2. High Level of Service

Financial Planning is not a one day process. It is more of a continuous process where your financial planner would monitor your investments every year and make changes to your portfolio which the change in the economic conditions in India and changing debt markets scenario. As he is getting paid to render you quality service, he is likely to do well as compared to so called mutual fund agents or insurance agents.

3. Understands your complex financials

A good financial planner would analyse a lot of things and understand your financial goals before asking you to invest somewhere. Like

·         Your current take home salary

·         Your savings scenario

·         Your monthly expenditure

·         Your current fixed assets

·         Your future goals

·         Your insurance requirement

·         Your contingency plan

After asking and analysing all the above points, he will design a picture in his mind and design a financial plan for you and your family needs

4. His Experience would be of good use to you

The financial planner must have dealt with a lot of people with different situations. As a experienced financial planner, he must have seen the ups and downs of the equity and debt markets. He would guide you to a conclusion where you are benefited with high returns in a long run

Do leave your valueable comments if you feel in favour or against the concept

Best Term Insurance Policies for 2012

A lot of investors in India have realised the importance of term insurance plans vis-a-vis whole life policy and endowment plans which are quite expensive in nature as compared to term plans. 
But there are a lot of questions which comes to their mind while choosing a term insurance plan and choosing the best term insurance plan.


Question 1- Do they buy term insurance from LIC or private company?
Question- Should premium amount to be paid should be the only consideration in deciding term insurance plan
Question 3- Should they go for offline or online insurance plan keeping the cost factor into consideration


I am going to answer all these questions but before that lets understand, why do you need term insurance:

• Just because in case of your untimely death, you family dependents doesnt have to suffer too much on account of finances apart from emotional loss
•  After your death, your child needs higher education which may cost around 25-30 Lakhs after 12-15 years considering a annual inflation rate of 8%
• After you death, your wife has to take care of your child marriage which may cost around 40-50 Lakhs after 15 years

Generally one must choose a term insurance plan on the basis of brand name of the company and financial health of the company and most important the percentage ratio of claim settlement called claim settlement ratio of insurance policy. Generally life insurance premiums from LIC would be on higher side and they also have high claim settlement ratio. 

Lets have a look at the life insurance premiums offered by some of the insurance companies which can give us a sense of best term insurance policies:

	Sum Assured	Age of Policyholder	Tenure of the policy	Premium
Met Life	30 Lakhs	30	25 Years	4269
Kotak Life	30 Lakhs	30	25 years	4739
ICICI Pru Life	30 Lakhs	30	25 years	5129
HDFC Life	30 Lakhs	30	25 years	8512

One can buy online term insurance plans which are much cheaper as compared to offline term insurance policies because of high commissions involved in offline insurance policies. 

Another important point to look at while anlysing term insurance policies are riders

1. Accidental Death Riders- This means you will get additional life cover but only if you get death from accident

2. Critical Illness Rider- This will help you to get additional life cover if you die due to the illness mentioned in the policy while buying it

3. Disability Rider- This rider covers you for disability and pays you life cover in some predefined installments in the case where you become permanent disable

4. Waiver of Premium- In case you become permanently disable due to some accident, you would be waived off for the future premium payments while your term insurance policy will remain in continuation

Finally while choosing the term insurance plan, one can recommend choosing HDFC Life Insurance which has high claim settlement ratio though it has high premium, this option may be one of the best term insurance policies in India.

Do leave your comments if you have any query regarding any term insurance plan