VCare Financial Solutions: Power of SIP

What is SIP?
When it comes to investing in the stock markets, we often wait to collect a large amount of money and invest it all at once. These investments are done in order to finance our future goals like buying a house, child's education, marriage or retirement planning. However recurring household expenses always erode the money which we would have otherwise kept for investments and the result - we end up compromising on our financial goals. Systematic Investment Plan (SIP) is a financial planning tool through which you can invest in the stock markets through small, periodic installments. Eg: you can invest as low as Rs 500/- on a monthly basis. Moreover you can also select the tenure of your installments. SIPs help you set aside a fixed amount every month for investments thus contributing towards your financial goals.

Builds Investment discipline

You earn regularly
You spend regularly
But, do you invest regularly ?

We all know that we need to invest regularly in order to set aside some amount of our earnings for future needs like buying a house or car, planning your children's future or planning for your retirement. Unfortunately most of us end up making sporadic investments which help little in achieving our financial goals. Through an SIP, an investor pledges to invest a fixed amount of money on a monthly basis in a mutual fund scheme for a predetermined time period. Also SIP provides the investor with the flexibility to increase the amount of his monthly installment at any time. The investor can also terminate the SIP at any time before the end of the tenure at no extra charge (A minimum of 6 monthly installments are however required for any SIP). Thus in a disciplined manner, you automatically invest a fixed amount every month for your future needs rather than spending it. Eg: You can start with investing Rs. 1000/- every month for a period of 3 years thereby investing Rs. 36000/- in total. Collecting Rs. 36000/- for investments right away may be difficult considering your household expenses, but you can always set aside Rs 1000/- every month to be invested in the scheme of your choice. Also if you are unsatisfied with the performance of the scheme or for any other reasons, you can terminate the SIP before the 3 yr duration at no additional charge.
Investment Discipline through SIPs now comes with an added advantage - Life Insurance e.g. Birla Sun Life Century SIP and Reliance SIP. SIP investments are also affordable & convenient.
Affordable & convenient
Affordability
Investments do not necessarily mean that one has to collect a substantial chunk of money to invest. One can start investing as low as Rs. 500/- through an SIP. This very feature of small monthly installments makes SIPs light on your wallet and an affordable investment tool.
Convenience in mode of payment
When we think monthly installments, we generally think of one more date to remember apart from the bill payment dates. That's not the case with an SIP. Birla Sun Life Mutual Fund offers you the convenience of direct debit of your SIP installments through Electronic Clearing Service (ECS) facility. Your SIP amount automatically gets debited from your bank account provided we receive a mandate for the same in your investment application.
Convenience in selecting installment dates
Birla Sun Life Mutual Fund offers you a choice of 7 dates to choose for your monthly installments. You may choose the 1st, 7th, 10th, 14th, 20th, 21st, or 28th of the month to pay for your SIP installments. Reliance Mutual Fund offers you 4 dates to choose 2nd, 10th, 18th or 28th.
SIPs have never been so affordable! Now you get life insurance cover of upto 100 times your SIP amount through Birla Sun Life Century SIP and Reliance SIP Insure Offers you insurance upto Rs. 10 Lac. (T & C apply).
SIP installments also help compounding your wealth.
Helps in compounding your wealth
Getting rich is simpler than you think, here's a simple formula to get rich:

Start Early + Invest Regularly = Create Wealth

Invest Regularly
Systematic investing has a compounding effect on your investments. In the long term, an investment as low as Rs 1000/- per month swells up into a huge corpus.This can be best explained by the following graph. The graph shows the value of investment at various rates of return for Rs. 1000/- invested every month for 30 years.

Data Source & Computation: Internal

Start Early
Now that we know that the power of compounding can create magic for your investments, starting your investments early also has its own advantages. Starting early means that the power of compounding starts acting on your money earlier thereby generating higher returns. Consider the following graph:

Data Source & Computation: Internal

An individual who starts planning for his retirement at 25 yrs of age by investing a modest
Rs. 1000/- month collects upto Rs. 40 Lac on retirement whereas his investment over the period is just Rs. 4.2 Lac

On the other hand if the same individual delays his retirement planning by 5 yrs, his wealth upon retirement reduces significantly (approx Rs. 15 Lac.)

Now you can enjoy insurance while your wealth is compounding. With Birla Sun Life Century SIP & Reliance SIP Insure you get life insurance FREE.

Volatile markets are of major concern. Do you know that SIP helps you tame market volatility?

Fights market volatility
Every investor dreams of purchasing stocks at a low price and selling it at a higher price. But, how does one know whether any given time is the right time to buy or sell? Many retail investors try to judge the market movements and end - up losing their monies in the long term.A more successful strategy is 'Rupee Cost Averaging' wherin you invest a fixed amount regularly. Thus you purchase more when the prices are low and purchase less when the prices are high. SIP investments takes advantage of this strategy:

The above example is merely an illustration of 'Rupee Cost Averaging'. The NAVs and returns generated are purely indicative and do not depict the performance of any mutual fund scheme.

Mr. A and Mr. B - One time Investor both invest Rs. 6000/- in a mutual fund scheme. SIP investor invests Rs. 1000/- per month whereas Mr B - One Time thinks that an NAV of 10 is the right price to invest.
In case of the SIP investor, his monthly investments automatically help him purchase more units when the prices are low. In tha same way he purchases less units when the prices are high.
In the long term, the SIP investor gains as his investments are unaffected by market volatility.

Now fight market volatility + get life insurance. Birla Sun Life Century SIP and Reliance SIP Insure gives you FREE life insurance cover.

Fights Inflation
SIP helps the investors invest in the Equity Markets. But, how does that help beat inflation? Well, you may want to check out the following graph:

It is evident from the graph that in the long term, equity investments have helped outperform various other investment avenues and has also helped beat inflation by a huge margin.

Helps plan for your financial goals

I wish to own a Honda City
Wish I could live in a 3 BHK penthouse with a sea view.
I want to take my family for a European tour.I need to plan for
my Child’s Education

SIP is a one stop shop to fulfill all your financial wishes and needs. It's really as easy as 1, 2, 3.
Click here to visit our Step by Step Financial Planning tool to plan for your financial goals.

Now you can get life insurance along with achieving your financial goals. That's one financial task off your shoulders! Birla Sun Life Century SIP and Reliance SIP Insure offers you FREE life insurance cover.

Helps Save Taxes
Do you always wait till December / January to hunt for the 'right' tax saving fund? While doing so you leave your investment to the mercy of the volatile market by making a lumpsum investment.
Now, you can start an SIP in Birla Sun Life Tax Relief '96 (BSLTR'96) / Reliance Tax Saver is an open ended Equity Linked Savings scheme. Investments of upto Rs 1 Lac in Birla Sun Life Tax Relief '96 / Reliance Tax Saver are exempt from tax as per Section 80C of the Income Tax Act.

Birla Sun Life Tax Relief '96 has been ranked 3rd among the Top performing equity Funds in the World by Lipper, a Reuters company. BSLTR'96 was judged so for its 10 yr performance (as on 31 Dec '07) on the basis of consistent returns among 6302 equity schemes considered for this ranking.

Now you can Save Tax + Create Wealth + Get Life Insurance Cover! Start an SIP in Birla Sun Life Tax Relief '96 through our Century SIP scheme and get life insurance cover of upto 100 times the installment.

About Century SIP
Protection and wealth creation are the two objectives of any investor. Birla Sun Life Mutual fund now offers you the benefit of both through Birla Sun Life Century SIP (CSIP).

Wealth Creation – Systematic Investment Plans (SIP) as a mode of investment is known to create long term wealth for the investor.

Protection – Century SIP offers its investors Life Insurance Cover of upto 100 times the SIP installment amount.

Features
Installment amount Rs. 1,000 per month (min CSIP)
Entry Load : For purchase of units under CSIP: 2.25%
Exit Load**: If Redeemed / switched out within 3 yrs: 2%; If Redeemed / switched out after 3 yrs: Nil
Payment : Electronic Clearing Service (ECS) or Direct Debits or Post Dated Cheques (PDC)
Life Cover Proceeds^ : Goes to the nominee
Benefits to Nominee^: Fund Value + Life Cover equivalent upto 100 times SIP installments
Schemes Available : All Open Ended Equity Schemes
**In the unfortunate event of death of the investor, no exit load on redemption/switching out of units by the nominee/joint holder, as the case may be. ^in case of pre mature death

Life Insurance Cover
The Insurance cover available with Century SIP will be absolutely free for the investor. The cost of insurance will be entirely borne by the AMC.

100 times Insurance
In the unfortunate event of the demise of an investor during the tenure of the SIP, the nominee gets the Fund Value + Insurance Cover equivalent upto 100 times monthly SIP installments. The insurance cover offered to the investor grows with the tenure of the SIP as shown below:

Year -- Life Insurance Cover
1 - Monthly SIP Installment x 10
2 - Monthly SIP Installment x 50
3 - Monthly SIP Installment x 100
4 onwards till end of tenure - Monthly SIP Installment x 100

All the above mentioned limits are subject to maximum cover of Rs. 20 lacs per investor across all schemes/plans/folios.

Insurance Tenure & discontinuation of CSIP
The tenure of CSIP is 55 yrs – Completed age of Investor. The life insurance cover offered to the eligible investor would continue even if the SIP stops after a minimum period of 3 years at the fund value subject to a maximum of 100 times of the monthly SIP installment. The cover ceases to exist on full/partial redemption or switching prior to completion of the SIP tenure.Please refer to the following flowchart:

Note – Insurance cover would cease, if investor redeems (fully / partially) or switch out (fully / partially) units before completion of the Century SIP tenure

* Fund Value = Value of units, accumulated under Century SIP, at start of the each policy year
No Paper Work
To avail of the life cover all an investor needs to do is enroll for a CSIP & sign a “Declaration of Good Health”. In case of unfortunate demise of investor the insurance claim will be directly paid to the nominee by the insurance company (Birla Sun Life Insurance Company.)
Benefits to Family / Nominee
In the unfortunate event of the demise of an investor during the tenure of the SIP, the nominee gets the Fund Value + Insurance Cover equivalent upto 100 times monthly SIP installments. Also no exit load will be cahrged for redemption / switching out of units by the nominee.
Consider the following example: Assuming a scenario where in an investor had started a 10 year CSIP @ Rs. 20,000 pm installment and a rate of return @ 8%p.a. On completion of the CSIP tenure, value of investment and insurance cover would be Rs. 36.59 lakhs and Rs. 20 lakhs respectively.The illustration below explains the same.