An Indian Woman Saves but a Wonder Woman does SIP

Warren Buffett says, “Do not save what is left after spending, but spend what is left after saving.” An Indian woman follows the same idea. She saves first and then spends money, be it shopping or personal finances. Indian women inherently have the habit of saving, no matter how small/big the amount is. No matter how little is given to an Indian woman to run a family, she will always manage to save some of it in the nooks and corners of her cupboard; And they have been doing this excellently for generations. What’s important is what do they do with that savings.

Indian women SAVE but fail to INVEST

The money in the cupboard lockers or savings account has done no good to anybody. Rather it loses on to its value with inflation. The same amount, when invested via SIP can do wonders.

What is SIP?

A Systematic Investment Plan or SIP is a planned mode for investing money in mutual funds. SIP allows you to invest a pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.). SIP inculcates saving habit and building wealth for the future. SIPs have proved to be an ideal mode of investment for retail investors who do not have the resources to pursue active investments. An SIP is generally preferred for an equity scheme and can be started with as small as Rs 500 per month.

Why SIP?

The biggest advantage while investing through SIP is Rupee Cost averaging. With volatile markets, most women might remain skeptical about the best time to invest and try to ‘time’ their entry into the market. Rupee-cost averaging allows you to opt out of the guessing game. Since you are a regular investor, your money fetches more units when the price is low and lesser units when the price is high. SIPs may make the volatility in the market work in favour of the investor.

When should you start an SIP and for how long?

SIPs also help in availing benefits of compounding. This means, the earlier one starts an SIP, longer the investment horizon, larger the benefits. Reason being, each rupee once invested earns a return, now this return plus initial money adds up to earn a greater return, allowing your investment to grow at a faster pace. Higher rates of return or longer investment time periods increase the principal amount in geometric proportions. This is the most important reason for investors to start investing early and keep on investing on a regular basis to achieve the long-term financial goals.

Given below is a view of what does a Rs. 5,000 per month saving (starting from 15th March, 2011), sums up today, i.e. in ten years, if invested in any of the five largest large-cap fund and in a savings account.

All you need is this small step. This small step, which can take you to greater heights.