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Systematic Investment Plan

Systematic Investment Plan. 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.

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Systematic Investment Plan

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  1. Systematic Investment Plan

  2. I don’t have enough money to investI’m too busy making money to worryabout managing it. I don’t have the time or expertise tofollow market movements and makeinvestments at the right time

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

  4. SIP • This approach allows you to combine - • Convenience • Rupee Cost Averaging • Flexibility • Power of Compounding

  5. Why SIP? • Investment experts the world over advocate Systematic Investment Plan (SIP) • Instills the much needed investment discipline • Puts to work two powerful forces

  6. Power of Compounding • Preeti started investing at the age of 25. She invested Rs.10,000 each year for ten years and then she stopped contributing • Rohit started investing at the of age 35 and then invested Rs.10,000 each year for 25 years.

  7. 76.9 lacs Rohit begins investing at 35 a similar amount of Rs.10000 annually. He invests for the next 25 years and he too does not withdraw any money. 25 year old Preeti invests Rs.10000 annually for 10 years and stops. She does not withdraw any money. 24.6 lacs Power of Compounding Start now!

  8. Rupee Cost Averaging • Technique of buying a fixed rupee amount of a particular investment at regular intervals, regardless of the NAV

  9. Rupee Cost Averaging • Different Scenarios - • Market goes up • Market goes down • Market goes up and then down • Market goes down and then up

  10. Market goes up – (1) Average cost of acquisition = 6000/390 = Rs.15.38

  11. Market goes up – (2) • Average cost : = Rs. 15.38 • Average Unit price= Rs. 17.20 • Value of investments at the end of 5 months = Rs 9360 • Profit of Rs.3360

  12. Market goes down – (1) Average cost of acquisition = 6000/430 = Rs.13.95

  13. Market goes down – (2) • Average Unit cost = Rs. 13.95 • Average Unit Price = Rs 15.60 • Value of investments at the end = Rs 4300 • Loss is Rs.1700 • The loss could have been Rs.3500 for lump sum investment

  14. Market goes up after going down – (1) Average cost of acquisition = 6000/440 = Rs.13.64

  15. Market goes up after going down – (2) • Average Unit cost = Rs. 13.64 • Average Unit Price= Rs 14.80 • Value of investments at the end of 5 months = Rs 8800 • Profit is Rs.2800

  16. Market goes down after going up– (1) Average cost of acquisition = 6000/280 = Rs.21.43

  17. Market goes down after going up– (2) • Average Unit cost = Rs. 21.43 • Average Unit Price= Rs 21.60 • Value of investments at the end of 5 months = Rs 5600 • Loss is Rs.400 (would have been Rs.1000 if invested at peak price)

  18. How has an SIP worked in these schemes * As on 30th June, 2006

  19. SIP - The bottomline • Simplicity • Hassle Free • Low acquisition costs • Discipline

  20. Franklin Templeton • All Franklin Templeton equity schemes offer SIP • Now you can invest in SIP on any day of the month • Low entry amount of Rs.1000

  21. Risk factors • Please note that there is no guarantee that SIP will always produce a profit • Before investing, please go through the offer document of the respective scheme for more detailed risk factors.

  22. Thank You

  23. Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAV of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. There can be no assurance that a schemes investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of the schemes. The above are only the names of the scheme and do not in any manner indicate the quality of the schemes, their future prospects or returns. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes. The Mutual Fund is also not assuring that it will make any dividend distributions under the dividend plans of the schemes though it has every intention of doing so. All dividend distributions are subject to the investment performance of the schemes. The investments made by the schemes are subject to external risks. Please go through the offer documents before investing. Statutory Details : Franklin Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seed corpus of Rs.1 lac) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trust Act 1882) and with Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager. The fund offers NAV’s, purchases and redemptions on all business days except during the period when there is a book closure.

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