A STUDY ON THE ROLE OF SIP AS AN IDEAL TOOL FOR FIRST TIME INVESTORS

BOTSA HARI PRASADPGDM151701135F2

Under Guidance of Mr. A.N.A SRINIVAS(Company Guide)

&Prof. VIJAYNTHA PAWASE(Faculty Guide)

INVESTMENT AVENUES

Real

Estates

Mutu

al Fu

nds

Equity Bonds

Bank Deposits

Life

Insurance

RISK RETURN MATRIX

CONCEPT OF MUTUAL FUNDINVETORS POOL THEIR MONEY

FUND MANAGER INVESTS THEY

MONEY IN SECURTIES

INCOME DIVIDEND GENERATED

INCOME IS DISTRIBUTED

AMONG SHARE HOLDERS

THREE COMMON REASONS FOR NOT INVESTING

• I don’t have enough money to invest

• I’m too busy making money to worry about managing it.

• I don’t have the time or expertise to follow market movements and make investments at the right time

SYSTEMATIC INVESTMENT PLAN is the only answer to all reasons.

INVESTMENT MADE EASY – SIP

SIP is an investment program that allows you to contribute a fixed amount (as low as Rs.1000 )in mutual funds at regular

intervals.

BENEFITS OF SIPInculcates the discipline to save and invest regularly

Negates the risk associated with market timings

Power of compounding

Rupee cost averaging

BENEFITS OF INVESTING SYSTEMATICALLY: POWER OF COMPOUNDING

• SIP is an effective means to beat market volatility and benefits from the enormous power of compounding over time.

Systematic Investment Plan Returns

Investment scenario A

Investment scenario B

Investment scenario c

Number of years

5 years 10 years 15 years

Monthly investment

Rs. 5000 Rs. 5000 Rs.5000

Total investment

Rs. 300000 Rs. 600000 Rs. 900000

Assumed annualized return

18% 18% 18%

Final corpus Rs. 4.93 Lac Rs. 16.86 Lac Rs. 46.01 Lac

BENEFITS OF INVESTING SYSTEMATICALLY: RUPEE COST AVERAGING

SIP-RUPEE COST AVERAGINGSIP INVESTORS LUMPSUM INVESTORS

MONTH UNIT PRICE INVESTMENT UNITS PURCHASED

INVESTMENT UNIT PURCHASED

1 50 1000 20 9000 1802 47 1000 213 45 1000 224 44 1000 235 46 1000 226 48 1000 217 49 1000 208 50 1000 209 52 1000 19Total investment 9000 9000Total units purchased 188 180Average unit price 48 50

IMPORTANCE OF STARTING EARLY

The three golden rules for all investors

Invest early

Invest regularly

Invest for long term

Particulars Scenario A Scenario BStart Age 25 years 40 yearsMonthly Investment

Rs.10000 Rs.10000

Stop Age 60 years 60 yearsTotal Investment Rs.42lacs Rs.24lacsSavings to grow to Rs.6.5cr Rs.99.9lacs

INVEST REGULARLY

HOW TO MAKE SIP WORK FOR YOU?• Set your financial goals

• Identify the scheme

• Decide the SIP amount

• Look for a long term

commitment

• Aim for the big picture

• Start investing

ICICI PRUDENTIAL VALUE DISCOVERY FUND Long term wealth creation solution A diversified equity fund that aims to generate

returns by investing in stocks with attractive valuations.

Investment approach Value based approach Bottom-up approach with flexi cap exposure

Period Returns (%)

1 year 12.4

2 year 11.1

3 year 19.9

5 year 16.2

ICICI PRUDENTIAL BALANCED FUND

Long term wealth creation solution An equity fund that aims for growth by investing in

equity and derivatives

Investment approach Uses in-house Price to Book Value Model Uses derivative instruments for hedging or portfolio

rebalancing Invests in Large Cap and Midcap Stocks

Period Returns (%)

1 year 12.4

2 year 11.1

3 year 19.9

5 year 16.2

COMPARISON OF ICICI MUTUAL FUNDS WITH OTHERS

As on 30th June, 2016Scheme NAV 1 Yr 3 Yrs 5 YrsAggressive funds

ICICI Prudential Balanced

97.25 6.69% 20.77% 15.40%

Birla sun life equity fund

313.24 6.25% 28.31% 15.08%

Kotak select focus fund 24.38 6.61% 24.41% 15.82%

Conservative fundsICICI Prudential Value Discovery Fund

119.87 5.48% 32.66% 19.74%

SBI Magnum Multi Cap Fund

35.46 10.10% 26.17% 15.33%

HDFC Capital Builder Fund

208.45 4.79% 22.44% 13.25%

*Mutual funds investments are subject to market risks, read all scheme related documents carefully.