I have been asked this question for over 30 years…and have wondered ..why people cannot invest Rs. 500? or Rs. 5000?
For many people this is a very fair question..and therefore they do not think of investing till they have “a big sum like Rs. 400,000” – like Mr. Panch asked me.
And I am a strong believer of SIP (by the way there are only about 25 IFAs who have a SIP book of more than Rs. 1 crore a month!! This of course does not include banks, but banks do not sell SIP as much as they sell lumsum.
When a person is new to investing, and he is a salaried person the best thing to suggest is a SIP. Small (Rs. 500 is the minimum)…and I know of people who do SIPs for Rs. 100,000 – in 4 funds thus making the commitment Rs. 4L a month. I have also met another person who was then doing SIP of Rs. 9L per month – albeit for a short period of 3 years!!
I was initiated to SIP by Suraj Kaeley – the then head of sales/marketing in Franklin Templeton. He now heads the Marketing function in UTI..so much so that some of us would call him SIP SURAJ…and I have been addicted to it. It is sad that a very small number of IFAs are as committed to selling SIPs – the numbers should multiply. When Mr. Panch asked me about sip HE had no clue about how the equity market works…and today his equity accumulation is 3x his provident fund accumulation and he is just 53 years of age. Over the next 8 years I expect his accumulation to be about 5x his provident fund!! Not bad at all for a person who in 2000 did not know what is a SIP…i presume he is continuing his SIPs – he tells me he is !!!
As soon as you start earning – having an investible surplus – you can do a sip. Today a couple of mutual funds allow you to do an auto top up..the sip amount will go up every year – hello wait it can happen over 6 months too – and thus silently your wealth keeps inching up. I am convinced my readers did not need this post – all of them are savvy..but just in case there are some new comers…let them read it…
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