INVESTORS OUTLOOK TOWARDS

SYSTEMATIC INVESTMENT PLAN

A project submitted to
University of Mumbai for partial completion of the
Degree Bachelor of Commerce
(Accounting & Finance)
Under the Faculty of Commerce

By
Ms. Sakshi Ramchandra Gavatade
Under the Guidance
Mr. Kishor Chauhan

Jnan Vikas Mandal’s Mehta Degree College

Sector 19 Airoli, Navi Mumbai,
Maharashtra 400708

ACADEMIC YEAR 2022-2023

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 DECLARATION

I the undersigned Miss. Sakshi Ramachandran Gavatade here by.

declare that the work embodied in this project work titled ‘Investors Outlook
towards Systematic Investment Plan", forms my own contribution to the
research work carried out under the guidance of Asst. Prof. Kishor Chauhan
is a result of my own research work has not been previously submitted to any
other University for any other Degree / Diploma to this or any other University.

Wherever reference has been made to previous work of others, it has been
clearly indicated as such and included in bibliography.

I, Here by further declare that all information of this document has been
obtained and presented in Accordance with academic rules and ethical conduct.

Name and signature the learner

Sakshi Ramachandran Gavatade

Certified by

Asst. prof. Kishor chauhah

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 ACKNOWLEDEMENT

To list who all have helped me is difficult because they are so numerous, and
the depth is so enormous.

Would like to acknowledge the following. As being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance
to do this project.

I would like to thank my Principal. Dr. (Mrs.) Leena Sarkar and Vice
Principal Mr.B.R Deshpande for providing the necessary facilities required
for completion of this project.

I take this opportunity to thank our Coordinator Asst. Prof. Kishor Chauhan.for
her moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Asst.
Prof. Kishor Chauhan whose guidance and care made the project successful I
would like to thank my College Library. For having provided various reference
books and magazines related to my project

Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my parents and peer who
supported me throughout my project.

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 Investors outlook towards SIP
Table of contents

Chapter Description Page no.

Abstract 5

1 Introduction 6

2 Review of Literature 57

3 Research Methodology 67

4 Data interpretation & Data Analysis 76

5 Suggestion and conclusion 78

Annexure 80

Bibliography 85

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 ABSTRACT

In the present time people have money in their hand but they are confused
regarding investment. The investing options which they had are investing their
money in the bank, deposit money for a fixed period. Buy some gold jewellery.
But now they have wide range of investing option open for them and they can
invest by their choices like for short term or long term. At present there are
many investing options available some of like investing in shares, debentures,
bonds, mutual funds, SIP ( systematic investment plans) and many more. So,
the one who is ready to risk can invest in some of these investing options.

Many people have heard the term SIP in advertisement but they actually don’t
know how it works or what it is. But they need to know about it. SIP is
something one should invest in. it’s kind of fixed deposit where you invest a
fixed sum of amount for your preferred years. But here you get more returns
than fixed deposit due to compounding. The returns get calculated on principal
amount and not on the amount which is invested. The best things about SIP is
minimum investing amount is RS.500 so that one can invest easily.

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 CHAPTER 1

INTRODUTION

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 INTRODUCTION

Systematic Investment Plan (SIP) is smart financial planning tool that helps you
create a wealth. To being with, an SIP is not a product or a fund. It is simply an
investment process. Instead of basing investment decision on expectations of
how the market will behave, SIP facilities a disciplined participation in the
market through the ups and downs. Since a fixed amount is invested across time,
SIP enables a reduction in average cost. Therefore, the returns from SIP are not
likely to be different from these of the mutual fund in which the investment is
made. Many investors believe that if they invest through SIP, they will earn
better returns that are not true. The returns will depend on how the fund
performed at all times.

These days SIP investment is turning into a generic term, few people even think
systematic investment plan similar from mutual fund. To give you clarity, "SIP
is not an investment" it's a "way of investing/regularly" in an asset class. even
mutual fund are not an investment mutual fund in the term used for investment
vehicle, which invest in equity, debt or other asset classes. A mutual fund is the

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trust that pools the savings of the number of investors who share a common
financial goal. The money thus collector is then invested in money capital
instruments such as share, debenture and other securities.

The income earned through this investment and capital appreciation

realized its shares by its unit holder in proportion to the number of units owned
by them. The team risk has variety of meanings in business and everyday life.
At its most general level, risk is used to describe any situation where there is
uncertainty about what outcome will occur. Life is obviously very risky. Even
the short- term future is often highly uncertain. In probability and statistic
financial management and investment management, risk is often used in more
specific sense tool indicate possible variability of outcomes around some
expected value.

Nowadays mutual fund plays crucial role in portfolio. A mutual fund is a

financial instrument to collect savings of the individual and institutions to
channelize them in cooperate securities in such a way as it makes sure its
investor triple benefit of steady return and capital appreciation along low risk,
due to investments being done after scientific study by the mutual fund manager.

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 1.1 CONCEPT OF SIP

The punch line famous in the investment industry “systematic

Investment Plans- Small savings, Big Returns” holds well. Although the
concept of investment is also available in post offices etc. But today SIP have
become synonymous to mutual funds which are regulated Board of India by
Securities and Exchange Board of India (SEBI). Average Indian families
have one or two earnings members. So, the scope of savings is also limited,
which further reduces down the scope of bulk investment out of those savings.
Therefore, SIP can play an important role, as the concept itself is based upon
small regular amount to be invested. Systematic Investment plan is a plan is a
plan of mutual fund in which the investment are done by paying a fixed amount
at every predetermined date. Systematic investing in a mutual fund is the
answer to preventing the drawbacks of equity investment and still enjoying high
returns.

Systematic Investment Plans are a plan of mutual fund, in which the

investment are done by paying a fixed amount at every predetermined date.
Systematic investing in a mutual funds is the answer to preventing the
drawbacks of equity investment and still enjoying the high returns. Mutual fund
SIP is a monthly based investment plan through which an investor could invest
could invest a fixed sum into mutual funds every pre-decided dates. This hedges
the investor from market instability and derives maximum benefit as the
investment is done at regular basis irrespective of market conditions. SIP is a
feature especially designed for investors who wish to invest small amounts on
a regular basis to build wealth over a long term.

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1.2 WHY SIP IS IMPORTANT IN INDIVIDUAL
PORTFOLIO?

SIP has played a significant role in individual portfolio due to its benefits.
It gives opportunities to small investors to invest their small amount and take
advantage of financial market. These benefits are as follows:

1 Ease

The process of investing in SIP is very easy. It can be operated by just

providing post- dated cheques with the completed Electronic Clearing System
(ECS) instructions. The SIP facility S generally available in most of the mutual
fund schemes; the main schemes for SIP are like fixed income generating
schemes, child fund schemes etc.

2. Portfolio Diversification:

Portfolio diversification is the best way to reduce the risk. In SIP, Mutual
Funds invest in various companies, across a broad cross section of industries
and sectors, in line with the objective of the scheme. This diversification reduces
the risk because hardly ever do all stocks decline at the same time and the same
proportion. We achieve the diversification through a Mutual Fund with far less
money than one can do on his own.

3. Professional management:

Of The next importance of SlP is that with the help of it the investor avails
the services experienced and skilled professionals who are backed by a
dedicated investment research team. Who always leads to invest after the
analyses of the performance and prospects of the companies and help to achieve
the objective of the scheme?

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4. Reduction of Risks:

An investor holds a diversified portfolio when he makes some investment

in mutual funds. In adverse case of losses, the loss is shared by all the unit
holders of the fund. Thus, the risk is reduced as compared to direct market where
in adverse cases all the money is lost.

5. Advantage of Compounding Money:

SIP provides opportunities for investing early and to keep investing

regularly. These regular amounts of savings, no matter however small may go
for a long way in creating a considerable amount of wealth over a long- term
and help in achieving our ultimate goal of accumulating wealth through the
compounding interest rate of return.

6. Inculcates the discipline of investing regularly:

As stated earlier, SIP investments are made at regular intervals i.e. either
monthly, quarterly or every six months on a predetermined day. The SIP amount
is automatically debited from an individual's account and the amount is invested
in the scheme chosen by the investors. This disciplinary approach of regular
investments is of big advantage to the investors as he / she doesn't need to
actively track the market.

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1.3 SIP's BEST CHOICE FOR BEGINNERS

Choosing a wise investing option is very necessary to minimize the risk

and to minimize the return because a balance is required to be maintained
between the risk and return. With the fulfillment of the objective, SIP has played
a significant role in the Indian Financial Market. It gives opportunities to small
investors to invest their small amount and to take return of financial market
With minimum risk. Investment is a commitment of a person's funds to obtain
future income in the form of interest, dividends, rent, premiums, pension,
benefits or the appreciation of the value of his principal capital. The main
objectives are increasing returns and to reduce the risk. Investment, referred to
as the concept of deferred consumption, which might consist of purchasing an
asset, rendering a loan, keeping the saved funds in a bank account such that it
might generate profitable returns in the future. It is the employment of funds
with the aim of achieving additional income or growth in value.

In other words, the options of investments are huge. all of them having
different risk reward trade off. Thus, the investment industry is really broad and
that is why understanding the core concepts of investments and accordingly
analyzing them is essential. Through understanding of the investment industry,
an investor can create and manage his own investment portfolio such that the
returns are maximized With the least risk exposure. Mutual funds are the best
available investment vehicle for retail investors. The average expense ratio is
typically in the range of 2.5% per year whereas the same professional fund
management offered by ULIP' S Comes at an average cost of over 8% annually.
One will not go wrong if the product category is used appropriately.

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 Using the MF route according to Akhil Chugh, director, net brokers, a
systematic Investment Plan (SIP) in a mutual fund is an effective means to beat
market volatility and benefit from the enormous power of compounding over
time. An SIP allows you to invest in any mutual fund by making smaller
periodic investments instead of a lump sum, one-time investment. Since this is
small money flowing out a regular interval, it doesn't affect your other financial
commitments significantly," says Chugh. "Rupee cost-averaging is another
benefit investor can reap from a disciplined SIP. Investing a fixed amount in a
fund at regular intervals over time gets you more units when the price is lower,
and the average cost open unit comes down.

The other advantage of investing through the mutual fund route is the
higher expected rate of return compared to most other investments. According
to Birani of TBNG capital advisors, to understand the role of returns, let us
assume early investments of Rs. 60,000 in each fixed deposits and mutual funds
(market linked products). The tables choose the right avenue illustrates the
returns from each. "lt shows not only that higher returns help create a much
larger corpus, but also conveys that the more you stay invested, the bigger
the corpus will be," says Birani.

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1.4 IN SHORT WHY SIP?

Disciplined approach to investment

No need to time the investment

Harness the power of two powerful investment strategies

Rupee cost averaging- benefit from volatility

Power of compounding- small investments create big kitty over time

Lighter on the wallet

Reap benefits of starting early

Thus, in the nutshell conclusion is the most people have differing patterns
of earning and spending, which is why investments need to be flexibility so as
to allow you to invest as per your

Situation. In order to ensure this flexibility Mutual Funds, have certain

characteristics like:

There are various types of Mutual Funds that invest in various schemes, from
money market instruments to equities, thus catering to people who'd like to
invest for duration ranging from a day to years. Minimum amounts of
investment range from as low as Rs.500, with no upper limit. In the case of
open-ended funds, daily investment and withdrawal is Possible. Invested funds
can be received within 1 to 5 working days. There is no maintenance charge on
portfolios. One can invest either directly with the Asset Management Company
or through a Financial Intermediary.

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1.5 WHY SYSTEMATIC INVESTMENT PLANS ARE
DISCIPLINED APPROACH TO INVESTMENTS?

Albert Einstein, the famous scientist, had once said, There are seven
wonders in' the word the eighth is compounding. He is the person who
understand it, earns it, which doesn't pay it." So. what was it that prompted one
of the best human minds to opine on those lines? Let's consider the historical
example of the Native Americans who sold the island of Manhattan on the most
expensive pieces of real estate in the US for beads and trinkets worth $24 in
1626 to a group of pilgrims. Today, had they not sold the island; they would be
worth trillion. That's a big sum of money. Was selling the island a mistake?
Most would agree. What if the Native Americans had invested the amount in an
account yielding 8% compounded annual interest? They would have 8223
trillion todays, enough to buy 28 Manhattan's.

Even at lower interest rates, they still would have come out ahead. There are 5
important rules to make compounding work for you.

1. Start early:
The younger you start. the more time compounding has to work in your
favor. And wealthier you can become. Riya and Priya are two friends. started
their career together at 25. Riya started saving RS.5, 000 every month from her
salary. giving her a 9% return per annum and continued till she was 35. Later.
she had some financial difficulties and couldn't save further. However, she did
not withdraw what she had saved and the investment continued to earn her 9%
per annum compounding.

Priya on the other hand. thought she was t00 young to save and started saving
only at 35 as she realized that she been working for 10 years Without any
savings. She, too, started saving RS.5, 000 every month till her retirement at 60.

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2. Invest Regularly:

Don't be haphazard. Remain disciplined and make savings for retirement a

priority. Do whatever it takes to maximize your contribution. If Riya had
continued to invest till 60 instead of stopping at 35, she would have Rs.1.48
crore.

3 Be Patient:

Do not touch the money unless really needed. Compounding only works if
you allow your investment to grow. The result will seem slow at first, but
persevere. Most of the magic of Compounding returns comes towards the end.

4. Invest for optimum returns:

Invest your money according to your risk tolerance and time frame of
investment. Don't put your money in what you feel is a convenient option as
every 1% return make a big difference to compounding. Let suppose Rs 5.000
is invested each month in two instruments, one giving 9% and other 11% returns
annually. In the long run, a small difference of 2% in return could almost double
the maturity value (see table, small difference and big return).

5. Mind inflation and taxes:

In this way we have seen how compounding can multiply money many folds
when people are investing. Similarly, it can work against anyone while
borrowing money or investing for negative real returns that are post tax return
is less than inflation. These things can make a substantial difference (see table
Beware the Tax effect).

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1.6 RUPEE COST AVERAGING AND POWER OF
COMPOUNDING

SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme.

SIP allows one to buy units on a given each month, so that once can implement
a saving plan for themselves. An SIP is generally preferred for an equity scheme
and can be started with as small as Rs.500 per month.

The biggest advantage of SIP is that one need not time the market, one can
miss the larger rally and may stay out while markets were doing well or may
enter at a wrong time when either valuation have peaked or market are on the
verge of declining. Rather than timing the market, investing every month will
ensure that one is invested at the high and the low and make the best out of the
opportunities that could be tough to predict in advance. SIP's thus making the
volatility in the market work in favor of an investor and help in averaging out
the cost called "Rupee Cost Averaging". For example, with rupees 1,000 one
can buy 50 units at Rs 20 per unit or 100 units at Rs 10 per unit depending upon
whether the market is up or down. Thus, more units are purchased when the
schemes NAV are low and fewer units when the NAV is high. Hence, when the
two cases are taken together, cost is averaged out. The longer the time frame,
the larger are the benefits of averaging. SIP's also help in availing benefits of
compounding. This means the earlier one starts an SIP and longer the
investment horizon. the larger the benefits, The reason being, each rupee one
invests earns a return. which ends up as more rupees to earn a return, allowing
investment to grow at a last pace. Higher rates of return or longer investment
time periods increase the principal amount in geometric proportions. This is the
single most important reason for investors to start investing early and keep on
investing on a regular basis to achieve the long-term financial goals.

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1.7 REAP THE BENEFITS OF STARTING EARLY

Having a long tenure of investment horizon will help investors create more
wealth for them. To do so, one needs to start early to take benefit of
compounding. No matter how small your installment’s are, over a period of time
become a large corpus without worrying about market volatility.

The graph above illustrates by starting early, one give wealth more time to
grow. Suppose one invest Rs 100000 at different time periods and the rate of
returns is assumed to be 10%. One can see that even a five-year period delay
makes a significant reduction in the overall creation of the wealth.

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1.8 ADVANTAGES OF SIP

1. Investment discipline:
Since the investment in SIP's is in the form of weekly, fortnightly, monthly
or quarterly installments, they tend to install a certain level of investment
discipline in the investor in terms of regular savings and investment. For
example, you decide to do a monthly SIP of Rs. 2,000 in a hybrid fund. So, on
a specified date, let's say 7th, 10th or 15th of every month, this amount will be
auto-debited from your bank account through ECS or PDCs.

2. Mitigates risk:
With SIP's, investment is done at regular intervals over a long period of
time; therefore, it tends to beat the market volatility. Furthermore, when market
is up, more units are bought and lesser when it is on a decline. The rupee-cost
averaging evens out the volatility.

3. Flexibility:

Due to the low investment amount and availability of various payment

intervals, an investor can time the investment as per his income flow. Further,
small amounts of investment do not put pressure on his current financial
resources.

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4. Hassle-free:

It is very easy to set up and monitor SIP's. After the initial formalities,
the amount Will be deducted directly from the bank on the specified date. So, it
saves the trouble of manual investment.

5. Rupee Cost Averaging:

As mentioned above in SIP's investment is done across market cycles.

When the market is high you get less units and when it is low then you get more
units and hence your investment is averaged out. This helps the investor to not
worry about market volatility and keep on investing while accumulating the
wealth.

6. Achieve your Goals:

SIP's is a great tool through which you can achieve your financial goals.
Say, you want to buy a car in 5 years which costs Rs 7.5 lakhs. Accounting for
6% inflation in 5 years it will cost approx. 10.04 lakhs. If you invest in a mutual
fund which gives you 12% yearly returns for 5 years, you will need to invest
approx. Rs. 5.7 lakhs to achieve your goal. However, if you go through SIP's
route. You need to invest only Rs. 12,593 per month for 5 years in the same
fund where you expect to get 12% return. This shows that through SIP's you can
achieve your goal by investing a relatively small amount monthly.

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7. Guilt Free Spending:

When you have done your investments for your goals at the start of your
month through SIP. then you can spend rest of the salary as you want and you
won't have the guilt of not utilizing or saving the money at the end of the month.

8. Power of Compounding:

When you start to invest early and invest for long term, you take benefits.
For example, a monthly SIP of just Rs. 1,000 done for 30 years will yield you
Rs. 30 lakhs if your investment earns a return of 120. However, if you start late
by 5 years, then the same investment of Rs. 1,000 will yield you just Rs. 16.8
lakh which is 45% lower than the SIP investment started just 5 years earlier.
Hence, even if you have only a small amount to invest, you should start an SIP
as early as possible.

9. Easy to invest:

SIP can be started for an amount as low as Rs. 500. Investing in SIP is a
hassle-free process as the amount will be deducted monthly from your bank
account automatically once your one- time mandate is approved. There are
numerous benefits of SIP for the investor and it is the perfect method to
accumulate wealth by regular investing over time.

10. Higher returns:

As compared to traditional fixed deposits or recurring deposits, SIP provides

double the returns. This can help you beat the rising costs because of inflation.

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1.9 DISADVANTAGES OF SIP

1. Unsuitable for irregular income flow:

This method is not suitable for investors who do not have reliable and
regular cash flow as the investment is to be made at predetermined intervals.

2. Uniform investment through ups and downs:

An investor cannot immediately change the amount being invested in

response to the ups and downs in the market. This keeps the investor from taking
advantage of the upswings.

3. Insufficient funds:

If an investor fails to maintain adequate balance in the bank on the day of

debit of STP, the PDC or ECS, as opted, will return dishonored. This means that
the investment will not happen that month.

4. Costs to manage the mutual fund:

The salary of the market analysts and fund manager comes from the
investors. Total fund management charge is one of the first parameters to
consider when choosing a mutual fund. Higher management fees do not
guarantee better fund performance.

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5. Lock in periods:

Many mutual funds have long term lock in periods, ranging from five to eight
years. Exiting such funds before maturity can be an expensive affair. A specific
portion of the fund is always kept in cash to pay out an investor who wants to
exit the fund. The portion cannot earn interest for investors.

6. Dilution:

While diversification averages your risks of loss, it can also dilute your
profits. Hence, you should not invest in more than seven to nine mutual funds
at a time.

7. Fixed amount:

Once the SIP is started a fixed amount has to be paid each month. This
amount however is chosen by the investor in the beginning. But, the key
disadvantage is that the amount fixed in the beginning should be paid every
month without fail and the amount cannot be charged or modified under any
circumstances.

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1.10 PROS OF SIP

1. Stress free:
An investor taking the SIP route doesn't have to worry about timing the
market. Even though it should ideally be managed and received on a periodic
basis, the mechanism is already set and a fixed amount is deducted from your
account each month.

2. Inculcates discipline:

It encourages the habit saving before investing. SIPs allow you to invest in
monthly schemes which are far easier to maintain in the long run.

3. Power of compounding:

One of the basic rules of being a successful investor is to start early. An

investor starting early is able to build the same corpus with lower investments
than one who starts later. Since SIP's do not seek a large amount of investment
and users can start investing with a low sum each month, it allows them to start
investing much early in life and get the advantage of 'Power of Compounding'.

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1.11 CONS OF SIP

1. Aimless SIP:
SIP is not the end; it is the means to an end. It should be a part of an investment
plan, with a clear goal in sight. Without this objective SIP is not going to be of
much use.

2. Rising markets:
Since you invest the same amount during the market highs and lows, SIP could
prove to he more expensive than lump sum payments in some cases, if that
amount is invested during the lows. Thus, it is advisable to opt for SlPs that run
for more than a year.

3. Wrong funds:
An SIP in the wrong fund doesn't improve investment prospects. A poorly
managed fund remains the same irrespective of the mode of investment. Hence,
the key is to find a well-managed fund first. These cons do warrant caution
before investing in SIPs, but if managed well and started early in the investment
journey, SIP is a safer route toward wealth creation.

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1.12 TYPES OF SIP PLANS IN INDIA

People wanting to invest in mutual funds through SIP often know about
only the basic SIP. But to meet the investment needs to the investors; fund
houses have now introduced different SIP variations. Systematic investment
plan or SIP helps you being your investment journey with a small amount. With
most funds, the minimum investment amount is only Rs.500/- month. But while
people who to invest in mutual funds know about the basic functioning of SIP,
most are unaware of the various types of SIP now available.

1 Flexible SIP:

Flexible SIP also known as flex SIP or flexi SIP, it allows you to adjust the
SIP based on your financial conditions as well as the conditions of the market.
With regards to the market conditions, there is a pre-decided formula, which
enables the investors to invest more when the markets are falling and go for a
lower SIP amount when markets are high. Similarly, in case of a financial
crunch, you can reduce the SIP amount and increase the same if you have more
disposable funds, like if you receive a bonus. So, basically, with flexible SIP
the SIP amount is flexible, and the investor has the option to adjust the amount
are required.

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2. Step-up SIP:

Steps-up or top-up SIP allows you to increase the SIP amount a fixed
intervals. For instance, you might start investing with Rs.10000 SIP’s in mutual
fund scheme of your choice and instruct the fund houses to increase the SIP
amount by Rs.1000 after very six month. So, after the first six months of
investing Rs.10000/- month, the SIP amount will be increased to Rs.11000/-
month. It will again increase by Rs. 10000/- month from the 13th month. Step-
up SIP can be an excellent option for salaried employees expecting a rise
shortly.

3. Perpetual SIP:

From all the different types SIP, one type of SIP that deserves special
attention is the perpetual SIP as it is linked to every SIP investor. When you
start a SIP, the SIP mandate required you to mention the start and end date for
the SIP. While investors generally do mention starting date, most do not fill in
the ending date. Every SIP with no end date mentioned in the mandate turns
into a perpetual SIP, Which will run until 2099. However, you do get the option
to stop the SIP by submitting a written application to the fund house, but if you
only want to invest Tor a fIxed tenure, make sure that you do enter the SIP end
date as well.

4. Trigger SIP:

With the trigger SIP, you get to set a trigger for your SIP investment. For
instance, you can mention that your SIP amount should be withdrawn from your
bank account and used to Purchase units of the selected scheme only if the NAV
of the scheme falls up to a certain level decided by you. You get other trigger
options such as specific dates and even levels of an index like Nifty or Sensex.
But this option is recommended only for experienced investors who have the
knowledge and experience to set such triggers effectively.

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1.13 LUMP-SUM INVESTMENT

Lump sum investment is simply a Single-payment investment. Here, the

investors make an investment into the chosen mutual funds at one go. This way
of investing is suitable for investors having a substantial amount of money
which they can park in one shot through a one-time investment.

A lump sum investment is considered to be a smart option when the valuations

are low in the markets. Valuations can be tracked through various valuation
ratios like Price to Earnings (P/E) and Price to Book (P/B).

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 Features of Lump Sum Investment

1. Control over investments

If you invest a Lump sum, you will be able to determine how much to invest,
and which mutual funds as per the market conditions. Without relying on the
judgment of fund managers, you can make decisions to switch b/w different
funds as per your analysis of the market conditions & the performance of funds.

2. Power of Compounding

You can appreciate the power of compounding when you invest a large lump
sum and stay invested for a long time. Your capital earns revenue via
appreciation or interest. This income Continues to earn extra returns when
reinvested. AS a result, you will be able to accumulate a huge corpus in the long
term

3. Let's you benefit from market corrections

An investor with a good knowledge of financial markets can use the strategy
of buying at dips or during market corrections by making lump-sum investments
and later on, can benefit from the rise in markets.

4. Convenience

This way of investing let you invest as per your convenience by making
investments only when you are willing to invest unlike SIP's, where you need
to follow a disciplinary approach.

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1.14 SYSTEMATIC INVESTMENT PLAN (SIP)

Systematic Investment Plan (SIP) is a disciplinary investment

approach in which the investor has to invest a fixed sum of money regularly
after a predefined period of time i.e., daily, weekly, monthly, quarterly etc. this
approach helps to reduce the average costs per investment unit through concept
of rupee cost averaging.

SIP tend to be passive investment because once you put money in, you
continue to invest in it regardless of how it performs. That’s why it is important
to keep an eye on how much wealth you accumulate in your SIP. Once you have
hit a certain amount or get to a point near your retirement, you may want to
reconsider your investment plans. Moving to a strategy or investment that’s
actively managed may allow you to grow your money even more.

30
 Features of SIP

There are many features of SIP which are mentioned below:

1 Financial Discipline

Over time, investors often fail to maintain the habits of savings &
investments. The secret to any investment is following a committed &
consistent approach of making investment. A systematic investment plan, as the
name implies, is a system of periodically investing a specific sum money on a
predetermined date. This way, it brings discipline to your investment habits.

2 power of compounding

Compounding is when the interest earned is invested black in the mutual

fund for higher returns. Besides, the primary conduct needs to stay invested for
a longer time to ensure higher profits and invest in the early stages. The
compounding effect magnifies the returns earned through SIP and invests for a
longer term. It ensures that the interest is earned on the principal amount and
the interest and the interest over a long period. This is highly beneficial for
investors who want to earn more in the longer run.

3 Small and periodic investment

Systematic investment plan helps you reach your financial goals even with
a small sum of investment made over periodic intervals. The SIP’s become
much lighter for your wallet. This helps you to make investment as per your
needs & requirements, even for low as Rs.100/- per instalment. For beginners,
SIP’s are a very good way to inculcate the habits of savings & investments for
long term goals.

31
4 Rupee cost averaging

Rupee cost averaging is an automatic market timing method. So, because

investments in SIP are made at periodic intervals, more units are purchased in
the declining market, and thus, the markets shift upward, the value of the
investments are synchronized. The divergence in returns between SIP and lump
sum increases as the SIP thrives on volatility.

5 SIP can be stopped or skipped

One of the SIP benefits is it can be stopped anytime by opting out of the
SIP plan, this is one biggest benefits over recurring deposits, which fine when
fine when the investment is stopped, either the investor can return to the amount
or continue to investor in the mutual fund. Besides, SIP offers an option to skip
the payment. If the investor has no balance in the account for SIP investment
for a particular month, he/she continue with the SIP in the next period without
any problems or fines.

32
1.15 COMPARISON BETWEEN LUMP SUM AND SIP
INVESTMENT

PARAMETER SIP LUMP SUM

INVESTMENT

Cash flow Regular One time

Continuously growing Less recommended More recommended

market
Falling NAV More recommended Less recommended

Required risk appetite Low to moderate Moderate to high

Time of investment Quite immune to the Matters a lot subject to

volatility of the market. market condition

Uncertain future income Not recommended Relatively

recommended

Cost of investment Less due to rupee cost High as this is one time

averaging large investment

Flexibility of High Low

investment

Horizon Ideal for short term Ideal for long term

33
1. Power of compounding:

Your investment in a SIP could be as small as Rs.100 INR per month. It

means that you can save money consistently in the long term. Since the monthly
investments are low, the may not be very high, On the other hand. When you
invest a big sum of money and stay invested for the long term, you will be able
to realize the benefits of compounding better. As with large investments, the
expectations of returns are also high.

2. Cost of Investment:

Cost of investment is considered to be lower when it comes to SIP due to

rupee cost averaging which enables investors to lower down the average cost of
investment and cut down the risks linked with the market volatility by sharing
the price of purchase over the course of time. This concept is also known as
rupee cost averaging. Since the investments are one-time in lump sum, costs per
unit might come out higher in bull markets as compared to the ongoing SIP's in
same schemes over time.

3. Past Performance:

When looking at the past performances of investments made through SIPs

and Lump Sum, it is noticed that SIP investments have earned higher returns
with more consistency as compared to the lump sum investments, however not
for all the instances.

4. Amount of Investment:

You can start investing in SIPs with as low as Rs. 100 a month. However,
the minimum SIP amount differs across schemes. On the other hand, generally,
lump-sum investments have higher minimum requirements for the investment
amount. The minimum amount varies across different MF schemes.

34
5 Suitability:

SIP is advisable for investors having low to moderate risk appetite. It is

suitable for investors who want to follow a disciplined investment approach to
reach their financial goals or accumulate wealth over a long period of time with
relatively lower volatilities in returns.

Lump Sum investments are recommended to investors having high to moderate

risk tolerance. Also, it is suitable for investors who have some extra cash which
they are looking to invest.

35
 Conclusion for Lump sum or SIP

Lump Sum or SP, which is better?

Lump-Sum investments as well as SIP investments both have their own

characteristics and are suitable for investors as per their risk appetite,
requirements & financial goals. SIP is one of the best ways to build a good
corpus over the long term. Also, it helps the investors to enter into financial
markets with minimum investment requirements & higher flexibility.

On the other side, Lump sum investments provide the opportunity to earn
sizable capital gains through large investments as per the market outlook &
conditions. Moreover, it lets you put your idle money in the markets to earn
good returns as per your requirements & preferences.

So, best way would vary among investors as per their needs & requirements.

36
1.16 HAS COVID CHANGED THE WAY PEOPLE MAKE SIP
INVESTMENTS?

The monthly investment juggernaut has veered off course. Fund

industry expert says it's just a speed-breaker. Inflows through Systematic
Investment Plans (SIP's) of mutual fund fell Rs. 8,123 crores in May. This was
the second straight instance of decline since the highest ever monthly collection
recorded in March and a six percent fall since then. The number of SIP's
discontinued or with completed tenures increased to 6.52 lakh, up from 5.40
lakh a month earlier, as per the Association of Mutual Funds of India (AMFI)
data. NS Venkatesh, Chief Executive. AMFI isn't too worried about the fall in
SIP collections." Monthly SIP contributions still continue to be over Rs. 8,000
crores. We have also seen that month-on-month, the number of SIP accounts
have gone up, displaying mature behaviour on the part of retail investors," he
says. But many anecdotes suggest that job losses, and salary and business
income cuts have compelled people to rethink their SIP's.

Ahmedabad-based architect and structural engineer, Jitayu Purani,28, used

to invest as much as Rs. 75,000 every month in five equity funds through SIP's,
till march ,2020. When the COVID -19 pandemic was declared in March, his
firm's projects came to a standstill. Income, he says, gets staggered over the
project tenure: nearly 50 percent of his payments flow through at the completion
Stage, "Though much of the country has started to unlock slowly, liquidity
problems are still there," he says. The payment cycle stretches over nine months.

37
Jitayu says that the lockdown's impact will thus last "for many more months".
Jitayu stopped all five of his SIP's effective April 2020. He's more comfortable
investing in international equities, and shares PF large-sized companies,
including those of banks which, he says, are too big to fail.

Mrin Agarwal, Founder Director of Fin safe India, says that in these
times of income or job losses, an emergency corpus becomes important. "If you
don't have an emergency corpus. then build one first. This is your 6-9 months'
worth of living expenses." she says. "If you have to stop your SIP's to build one,
and then do it." Mrin adds.

Before COVID-19 struck, Delhi-based Anand Verma, a pilot in a low-

cost airline, used to invest around Rs. 70,000 in SIP's. After his airline was
grounded, Anand got paid for 10 days in March. He received nothing in April
and May. In his earlier tenure with the merchant Navy, he saved sizable in US
dollars. But, apart from spending Rs. 65 lakhs on pilot training, his bank mis-
sold unnecessary insurance policies to him. His goal of buying a house where
he hoped to move in after marriage just got pushed back a little further. Anand
is back in the cockpit now, but he flies only twice a month for now.

38
Diversify your investments

For those who haven't lost their job or have faced only a small fall in their
income, SIP's have continued. Nandakumar Nayak, 63, a Mumbai-based retired
electrical engineer spends his days conducting online training classes. He had
started his first SIP in 2005. Apart from the bull-run, Nandakumar also survived
the market crashes of 2008 and March 2020. His secret sauce: diversification.
"I have been investing only so much that it doesn't become a burden on me," he
says.

Kalpesh Ashar, founder, Full Circle Financial Planners and Advisors, says
that if you stay invested for a long period, your investment portfolio can absorb
the shocks. "The March 2020 market crash may have taken back our mutual
fund investments back in time. But investors who have continued their SIP's for
around 7-8 years or more, are still happy," he says.

Surat - based investor Vatsal Naik. 53, moved gradually from investing in
fixed deposits at first. Then, he tested waters in government securities and liquid
funds and then finally in equity funds. Good experience in debt funds increased
Vatsal's confidence in mutual funds and by May 2003, he had started his SIP's
in equities. He had invested in around 400 schemes by 2009! Fortunately, he
liquidated his investments for expanding his business. His SIP's still continued,
but in just five schemes now.

39
Asset allocation and portfolio diversification

Given that the markets fell heavily in March 2020 when the pandemic
struck created fear among investors. Uncertainty struck in an already bleak
climate of Covid-19 and some DIY investors excited in panic. This was because
of an unclear understanding of things that may unfold due to the pandemic.
Added to this fatality was the looming fear of corporate ethics and practices,
which affected fixed income investments in a big way - especially on the credit
risk side.

They say opportunities arise in the midst of mayhem and gloom. This is
when newer asset classes gained importance. ETF's became the preferred low
cost passive investment strategy and gained ground worldwide. Gold as an asset
class investment gained more importance and unique investment styles and
strategies came up. International equity investment gained traction because the
performance of international markets in the calendar year 2019 seemed to
outweigh the Indian BSE Index. The need to invest in negatively correlated asset
classes became clearer because of uncertainty and market volatility.

Enquiries about insurance policies increased. The general need to increase

medical insurance. The general need to increase medical insurance gained
importance. Employees from companies although still hesitant and content with
the company health insurance benefits provided by their employers, did enquire
how to take independent health insurance.

Unfortunately, sometimes, it takes life-threatening events to follow the

financial advisor's advice. Covid 19 made clients ask about health insurance
more. Today investors are looking for SEBI Registered Investment Advisors.

40
Certified Financial Planners, Certified Wealth Managers, and Chartered
Financial Analysts who have the qualification, experience, certification and
ethics to back their professional expertise.

Money conversations are very confidential and require trust at the

forefront. Investors are willing to pay a professional fee for valuable advice and
need based association. They in turn expect close interactions, situational
analysis, scenario analysis and comprehensive recommendations from their
advisors. There is a need for professional advisors and hopefully more women
advisors to help investors in their lifelong journey of financial independence.

41
 1.17 COMPARISON BETWEEN VARIOUS
SAVING/INVESTMENT METHODS

Sr. Various Rate of Tenure Security Liquidity Returns on Taxation Risk factor/
No. methods for interest Investment theft/fraud
savings&
Investment
1. Bank Fixed Varies 7 days to 10 High Premature Varies Interest No risk
Deposit years exit taxable as
per tax
slab
2. Gold/Silver Marked- Can be sold Medium Varies Marked- STCG- Low-
Linked any time Linked Added to moderate
income
LTCG-
20%
3. Insurance Varies 10-20years Medium Low Moderate u/s 80C No risk
Schemes deduction
s available
4. Real Estate Marked- Can be sold Moderate High Marked- STCG- High
Linked any time Linked Added to
income
LTCG-
20%
5. PPF Moderate 15 years High Partial Moderate Interest No risk
Withdrawa tax
l free(EEE)
status
6. Recurring Varies 70 days to10 High Premature Varies Interest
Deposit years exit taxable as
per tax
slab
7. Saving Low Open or end High Easily Low Low No risk
Deposit anytime of Withdrawa
time l
8. SIP/Mutual Marked- Can be sold High High High Tax No risk
Fund linked/high any time applicable

9. RBI Bonds Moderate 7 years High Low Moderate Tax No risk

applicable

10. NPS Moderate 3 locking High Tier I Moderate U/s 80C No risk
period &Tier II deduction
options s available

42
On the basis of above table, here is a look at the top 10 investment avenues
where investors look at while savings for their financial goals.

1. Bank Fixed Deposit (FD):

In India it a very popular method of investment, through a bank or post

office, fixed deposit (FD) is a safe choice for investor. Under the deposit
insures=net and credit guarantee corporation (DICGC) rules, each depositor in
the is insured up to a maximum of Rs.1 lakh for both principal and interest
amount. As per the need, one may opt monthly, quarterly, half-yearly, yearly or
cumulative interest option in them. The interest option in them. The interest rate
earned is added to one’s income and is taxed as per one’s income slab. The main
drawback of this scheme is liquidity because in an emergency investor cannot
withdraw lump sum or full amount before maturity. In some circumstances, if
the investor withdraw their money he loses his good return on it.

2. Gold:

India is country where people more appreciate this precious metal. For this
purpose, they invest more and more in this metal. Possessing gold in the form
of jewellery has its own concerns like safety (purity & theft) and high cost. Then
there are some ‘making charges’, which typically range between 6-14 percent
of the cost of gold (and may go as high as 25 percent in case of special designs.)
For those who would want to buy gold coins, there’s still an option. One can
also buy ingeniously minted coins. In this investment, no doubt to say that
liquidity is there but lots if risks (i.e., the purity of gold, theft or loss etc) are
also there.

An alternate way of owning paper gold in a more cost- effective manner is

through gold ETFs. Such investment (buying & selling) happens on a stock

43
exchange (NSE & BSE) with gold as the underlying asset. Investing in
sovereign gold bonds is another option to own paper-gold. In sovereign gold
bond have some liquidity issue, it means an investor cannot withdraw before
locking period or otherwise ready to bear the loss.

3. Insurance Schemes:

Sometimes people think it they invest in insurance schemes they will be

benefited from two sides. The first side, they secure that futures misfortune or
any type casualty and the second side they would found some money for future.
This is a nightmare who thinks that the insurance scheme's is good for their
investment. It was a traditional approach where investor invests their money in
insurance schemes. In reality, through insurance schemes, nobody can get a
good return.

4. Real Estate:

It is a very demanding investing method in investor's point of view, No

doubt real estate gives a higher return but some points are also important to
know about that. The house that a person lives in is for self- consumption and
should never be considered as an investment but an investor does not intend to
live in it and buy the second property will be the real investment of an investor.
The location of the property is the single most important factor that will
determine the value of property and also the rental that it can earn. Investments
in real estate deliver returns in two ways- capital appreciation and rentals.
However, unlike others asset classes, real estate is highly liquid. The other bug
risk is it getting the necessary regulatory approvals, which has largely been
addressed after coming of the real estate regulator.

44
5. Public Provident Fund (PPF):

The Public Provident Fund is also one of the most demanding investment
schemes. The PPF has a long tenure of 15 years so as a result of the
compounding of tax-free interest is huge, especially in the later cars. Further,
since the interest earned and the principal invested is backed by sovereign
guarantee, it makes it a safe investment. The drawback of this scheme is
liquidity because in an emergency investor cannot draw lump sum or full
amount before maturity. In some circumstances, an Investor can only partial
withdraw their money and also loses his good return on it.

6. Recurring Deposit:

Recurring deposit is also an investing method which provides a person

with an opportunity to build up saving through regular monthly deposits of fixed
sum over a period of time. Recurring Deposit is a special kind of Term Deposit
offered by banks in India which help people with regular incomes to deposit a
fixed amount every month into their Recurring Deposit account and earn interest
at the rate applicable to Fixed Deposits. Minimum Period of Recurring Deposit
is 6 months and maximum is 10 years. Tax Deducted at Source (TDS) is
applicable on Recurring Deposit. As a comparison to other schemes, the main
demerit is its return rate which is low. If the interest earned on recurring deposits
at the rate of tax slab of the RD holder.

7. Saving Deposits:

It is not a proper investment scheme. It is a saving account or deposit

account held at a retail bank which pays interest and these accounts holder can
set aside a portion of their liquid assets while earning a monetary return. This is
not an investment method. Some people held their lots of money in this account
it is the biggest mistake from them. This deposit gives only 4 to 5 percent return.
So it is not a method of investment.

45
8. SIP/ MUTUAL FUND:

A] Direct equity:

Investing in stocks may not ne everyone's cup of tea as it's a volatile asset
class and there is no guarantee of returns. Further, not only is it difficult to pick
the right stock, timing of entry and exit is also not easy. The only silver inning
is that over long periods; equity has been to deliver higher than inflation-
adjusted returns compared to all other asset classes.

At the same time, the risk of losing a considerable portion of capital is high
unless one opts for the stop-loss method to curtail losses. In stop –loss, one
places an advance order to sell a stock at a specific price. To reduce the risk to
certain extent, investor could diversify access sectors and market
capitalizations. Currently, the 1,3,5 year market returns are round 13,8 and 12.5
percent respectively. To invest in direct equities, one needs to open a Demat
account (An account that is used to hold share and securities in electronic format
is called a Demat account)

B] Equity mutual funds:

Equity mutual funds predominantly invest in equity stocks. As per current

securities and Exchange Board of India (SEBI), mutual fund regulations, an
equity mutual fund scheme must invest at least 65 percent of its assets in equities
and equity-related instruments. An equity fund can be actively managed or
passively managed, and these track the underlying index. Equity schemes are
categorized according to market-capitalization or the sectors in which they
invest. They are also categorized by whether they are domestic (investing in
stock of only Indian companies) or international (investing in stock of overseas
companies)

Currently, 1, 3, 5 year market return is around 15, 18 & 20 percent respectively.

46
C] Debt mutual funds:

Debt funds are ideal for investors who want steady returns. They are
volatile and hence, less risky compared to equity funds, Debt mutual funds
primarily in fixed- interest generating securities like cooperate bond,
government securities, treasury bills, commercial paper and other money
market instruments.

Currently the 1, 3, 5 years market return is around 15, 18, & 20 percent
respectively.

9. RBI Taxable Bonds:

It had decided by the Government of India to issue 7.75% Savings (Taxable)

Bonds, 2018 with effect from January 10, 2018, in terms of Gol notification. F.
No. 4 (280-W & M/2017 dated January 03, 2018. Those bonds come with tenure
of years. There is no maximum limit for investment in the Bonds. According to
age, these those bonds have locking periods for withdrawal. The Bonds held to
the credit of Bonds Ledger Account of an investor do not transferable.

10. National Pension System:

The National Pension System (NPS) is a long term Retirement-Focused

investment product managed by the Pension Fund Regulatory and Development
Authority (PFRDA). NPS provides two types of accounts- Tier I and Tier ll,
Tier I is a non-withdraw able account till retirement and is meant for savings for
retirement while in Tier II account the subscriber is free to withdraw savings
whenever he wishes. Tier Il of NPS is covered under section 80C for deduction
up to Rs. I1.50 lakh, provided that there is a lock-in period of 3 years. The
minimum annual (April-March) contributions for an NPS Tier I account to

47
remain active has been reduced from Rs. 6,000 to Rs. 1,000. It is a mix of equity,
fixed deposits, corporate bonds, liquid funds and government funds, among
others. Based on investor risk appetite, an investor can decide how much money
can be invested in equities through NPS.

So, on the basis of the above methods or schemes, an investor can invest their
money. Now, kit is necessary to understand more about the Systematic
Investment Plan.

48
1.18 SWOT ANALYSIS OF SYSTEMATIC INVESTMENT
PLAN

Strengths Weakness Opportunity Threat

1. In systematic 1. SIP Companies 1. The emphasis on 1. SIP is totally
Investment Plan charge entry and averaging out in an market- based to there
(SIP) one cam exit fees. SIP makes it more is a threat of risk of
invests a very small useful in case of an loss.
amount as their equity fund.
convenience. SIP
reduces the average
cost.
2. SIP helps to avail 2 The same amount 2 As the volatility is 2 As a companies to
the power of of money is to be greater, a SIP is the long term, the
compounding invested at regular useful for a debt fund short time investment
interval over a as well to build a pool does not give proper
period of specified of savings. return to the investors.
time span
3 SIP avoids the 3 In the long term run
pitfalls of market investment, SIP can
timings. give higher returns.

4 SIP makes one

present in the
market over a period
of time.

5 SIP helps to
accumulate wealth
in a disciplined
manner by rupee
cost averaging.

49
1.19 WHAT ARE BEST SIP MUTUAL FUNDS?

A mutual fund is formed when an Asset Management Company

(AMC) pools investments from several individual and institutional investors to
purchase securities such as stocks and bonds. The AMC have fund managers to
manage the pooled investment. These are finance professionals with an
excellent track record of managing a portfolio of investments. In short, mutual
fund club investments from various investors to invest their money in bonds.
Stocks, and other similar avenues.

Mutual fund investors are assigned with fund units corresponding to

their quantum of investment. Investors are allowed to purchase redeem fund
units only at the prevailing Net Asset Value (NAV). The NAV of mutual funds
varies daily depending on the performance of the underlying asset. Mutual funds
are well regulated by the Securities and Board of India (SEBl), and hence, they
can be considered as a safe investment option. A significant advantage of of
investing in mutual fund is that investors can diversify their portfolio at a
relatively lower investment amount.

Investing in Mutual Funds via SIP is advisable for the first-time

mutual fund investors as it helps them in instilling a sense of financial discipline
in the long run. The frequency of your SIP can be weekly, monthly or quarterly
as per your comfort. Most millennials prefer taking the SIP roué as it gives them
a high degree of flexibility. Investing through SIP compels you to set aside a
Fixed regularly, which is what is needed to make investing a habit.

50
1.20 TOP 10 BEST PERFORMING MUTUAL FUNDS

Mutual funds are broadly classified into equity funds, debt funds and
hybrid/ balanced funds based on their equity exposure. If a mutual fund’s equity
exposure exceeds 65%, then it is classified under equity funds. If not, then it
goes under debt funds. A hybrid mutual fund invests across both equity and debt
securities.

THE TABLE BELOW SHOWS THE BEST EQUITY FUNDS:

Mutual funds 5yr. Returns 3yr. Returns Min. Investment

BOI AXA SMALL - 43.27% Rs. 5000/-

CAP FUND Direct
plan-Growth
ICICI Prudential 35.07% 42.28% Rs. 5000/-
Technology Fund-
Direct plan-Growth

Aditya Birla Sun 33.84% 42.01% Rs.1000/-

Life Digital India
Fund- Growth-
Direct Plan
TATA Digital India 35.94% 41.3% Rs. 5000/-
Fund Direct plan-
Growth
ICICI Prudential 33.9% 41.05% Rs. 5000/-
Technology Fund
Quant Small Cap 24.54% 40.81% Rs. 5000/-
Fund- Direct Plan-
Growth
PGIM India Midcap 25% 39.87% Rs.5000/-
Opportunities Fund-
Direct Plan- Growth
Aditya Birla Sun 33.13% 39.8% -
Life Digital India
Fund Growth
TATA Digital India 34.23% 39.65% -
Fund Regular
Growth
Quant Infrastructure 27.89% 39.58% Rs. 5000/-
Fund- Direct Plan-
Growth

51
1.22 HOW THE SELECT THE TOP PERFORMING
MUTUAL FUNDS?

The following are some of the parameters that must be considered while
selecting the top performing funds:

1. Check the fund's track record

A Top-performing fund typically has an excellent track record of

providing higher returns over the last three and five years. The performance of
these funds would have outperformed their benchmark and peer funds. You
have to analyses the fund's performance over the last few business cycles. In
particular, check for fund's performance when the markets were down. The
performance of a top-performing fund is not affected much by the market
movements. However, you need to note that past performance is not indicative
of future returns.

2. Check the financial ratios

It is important to assess the financial ratios such as alpha and beta before
deciding if a fund under consideration is a top-performing one in its category.
Returns and risks always go hand in hand. Returns are the rise in the overall
value of the capital invested. Risk is defined as the uncertainty associated with
an investment and these concerns the possibility of not receiving any or negative
returns due to numerous reasons. Hence, any investor must assess the risk-return
potential, and this has made the risk return analysis possible by financial ratios.

Sharpe and Alpha ratios provided much-needed information. Sharpe

ratio is indicative of the excess return that the fund has delivered on the addition

52
of every unit of risk being taken. Hence, funds with the higher Sharpe ratio are
considered better that those with the Lower ratio. Alpha shows the additional
return that the fund manager has generated as compared to the benchmark.
Funds with higher alpha are considered better.

3. Check the expense ration

Expense ratio is a very crucial factor that must be analysed when choosing
a mutual fund plan. Expense ratio is the fee charged by the fund houses to
manage your investment. It is expressed in term of a percentage of fund’s
returns. It is deducted from the returns that an investor would get. Needless to
say, a higher expense ratio reduces the take -home returns on investors. The
fund houses cannot charge more than the limit set by the Securities and
Exchange Board of India. (SEBI). The expense ratio of fund scheme should
justify the returns provided. A frequent shuffling from the assets in the portfolio
increases your cost of investment (expense ratio) as the fund manager incurs
higher transaction cost. Check the consistency in the expense ratio and ensures
that you are incurring reasonable charges as the expense ratio. If you come
across two funds with a similar asset allocation and past performance, then you
may choose to invest in the one with the lower expense ratio.

4. INVESTMENT OBJECTIVE

Investments in any schemes should be made only after carefully assessing

life goals. Once an assessment of the needs has been made. You need to map it
with the objectives of a mutual fund scheme to find out if investing in it yields
you the desired result. Like individuals, mutual funds too come with a particular
objective, and it's on the investor to gauge if their objectives are in sync with
the mutual fund scheme they are going to invest.

53
5. FUND HISTORY

You can base your mutual fund selection activity on the fund history.
Mutual funds having more extended history are considered good. Also, a mutual
fund is judged based on how well it had performed over a good range of
timeframe, especially when the markets were in a bad phase. This data will not
be available for newly launched fund. Investor should consider at least five
years of a fund’s history before making any investment related decision.

6. PERFORMANCE OF FUND MANAGER

The fund manager plays a significant role in the success of a fund. Fund
managers handle the investors’ money, it is the fund manager expertise that
allows them to make profits. If a fund manager is able to recognize the
opportunities to make profitable investments, then the fund would see good
returns. Hence, the fund manager must have a good track record.

54
1.23 TAXABILITY OF BEST SIP MUTUAL FUND

Regardless of the mode of investment (SIP or Lump sum), the same rules
of taxation apply. Dividends offered by mutual funds are added to your overall
income and taxed as per income tax slab you fall under:

I. Taxation of equity funds

Equity fund units redeemed within a holding period of one year will
result in short term capital gains. These gains are taxable at a flat rate of 15%.
You make long term capital gains if you redeem your fund units after a holding
period of one year. Long term capital gain of up to Rs.1 lakh a year are made
tax exempt. Any long term gains over and above this limit are taxed at 10%,
with no benefit of indexation. Units purchased through SIPs are redeemed on a
first- in- first- out basis, and the rules of taxation mentioned above apply. If you
invest in an equity fund for two years and decide to redeem all your investment
at once at the end of two years, then e gains while the rest is taxable as short
term capital gains.

II. Taxation of debt funds

Debt fund units redeemed within a holding period of three years result in
short- term capital gains. These gains are added to your income and taxed as per
the income tax slab you fall under. Long term capital gains are realised when
you redeem your debt fund units after a holding period of three years. These
gains are taxed at a rate of 20, with the benefit of indexation. If you invest in a
debt fund for four years and decide to redeem all your investments at once at
the end of four years, then the gains from the units that have been held for more
than three years are taxable as long term capital gains while the rest is taxable
as short term capital gains.

55
III. Taxation of Hybrid funds

If the equity exposure exceeds 65%, then the rules of equity funds taxation
apply. If not, then the fund is taxed like a debt fund.

56
 CHAPTER 2

REVIEW OF LITERATURE

57
 Review of Literature

1. Singhal, S. & Gael, M. (July, 2011):

The Empirical result reported that SIP Plans has performed better than
the one-time investment. Shelly Singhal (2011) have stated that Systematic
Investment Plans (STP) 1s among the most successful financial innovations
grown at a fairly rapid pace in emerging markets and India is no exception to it.

2. Dr. Ravi Visa, (2012):

Says that mutual funds were not that much known to investors, still
investor rely upon bank and post office deposits, most of the investor used to
invest in mutual fund for not more than 3 years and they used to quit from the
fund which were not giving desired results. Equity option and STP mode of
investment were on top priority in investors list. It was also found that maximum
number of investors did not analyse risk in their investment and they were
depending upon their broker and agent for this work.

3. Paul, T. (July 2012):

Have observed Mutual funds have evolved over the years. In keeping with
the changes in the economic and financial systems, as well as the legal
environment of the country. New products have launched according to the
requirements and changes in the investors’ perceptions and expectations.
Understanding the investors’ expectations and meeting those expectations are
the key area of interest of marketing experts.

58
4. Kandpa, V, & Kavidayal, P.C. (2013):

Have given the information for restriction of mutual fund investment in

top cities or urban areas is the lack of awareness level in the rural and semi
urban areas. The absence of product diversification and confusion in the market
has been enlarged by the lack of marketing initiatives.

For Mutual Funds. The role of mutual fund agents or distributors is to educate
the investor community. Therefore, the spread of Mutual Fund market has been
limited.

5. Vyas R. (2013):

Have mentioned in his study that mutual fund companies should come
forward with full support for the investors in terms of advisory services,
participation of investor in portfolio design, ensure full disclosure of related
information to investor, proper consultancy should be given by mutual fund
companies to the investors in understanding terms and conditions of different
mutual fund schemes, such type of fund designing should be promoted that will
ensure to satisfy needs of investors, mutual fund information should be
published in investor friendly language and style. Proper system to educate
investors should be developed by mutual fund companies to analyse risk in
investments made by them, etc.

59
6. Kumar, S. &Kumar, V. (2014):

In their study it is mention that "Mutual fund is a kind of investment that

uses money from many investors to invest in stocks, bonds or other types of
investment and the fund manager decides how to invest the money.

7. Goswami, A.G. (2014);

Have observed mutual fund investment is a diversified portfolio of

securities, which can include equity securities (such as common and preferred
shares), debt securities (such as bonds and debentures) and other financial
instruments issued by corporation and government, according to the stated
investment objectives of fund. The benefit to investor in buying shares of mutual
fund comes primarily from diversification, professional money management
and capital gain and dividend reinvestment at relatively low cost.

8. Sharma, R. (2015):

In his study he discovers the investment objectives of selected mutual fund

investors and to identify the types of mutual fund schemes preference by elected
mutual fund investors. The results presented that the main objective behind to
invest in mutual fund is good return, safety and tax benefit. The research also
suggested that the growth schemes and balanced schemes are most preferred in
comparison to other schemes. Male and female respondents do not significantly
different across investment experience. Graduate respondent is less experienced
as compare to other academic qualified respondents. If investment experience
is analysed on the base of occupation than it is found that servicemen and
professionals are less experienced in compare to other occupationally groups.

60
9. Sharma, S. (2015)

Have mentioned about the (ELSS) of mutual fund Equity Linked Savings
Scheme (ELSS) a type of mutual fund, which invests the Corpus equity and the
equity related product schemes offer tax rebates to the investors under specific
provisions of the Indian Income is open-ended: hence can be subscribed to and
exited from at any point of time.

12. Mahalakshmi Kumar and Rajesh Mankani (2017)

Research whether working women are aware of various investment options

available with special reference to Mumbai city. Primary data was collected
through a structured questionnaire and a descriptive cross- Sectional design was
adopted. Education helps women to become aware of the need to earn, save and
invest. It increases their ability to understand various investment avenues, their
pros, and cons and helps them to make the right investment decisions to achieve
their investment goals. It empowers them to obtain financial Independence
which in turn can give them empowerment in other area as well. Education gives
women confidence and the ability to understand the importance and need for
making decisions regarding investment for attaining their financial goals. This
motivates them to collect information about various investment avenues so that
they can maximize returns with minimum risk.

13. Baiq Fitri Arianti (2018)

Analysed and measured whether financial literacy, financial behaviour,

and income influence the investment decision of an individual. Data was
collected through questionnaires, the sample size was 100 and the techniques
used are descriptive statistical analysis, data quality test, classical assumption
test, multiple linear regression test, F test, t-test and coefficient of
determination. Financial literacy doesn't have significant effect on investment
dictions but Incomer has significant effect on investment decisions.

61
14. Varun Sagar Singak et. Al. (2019)

In this research they tried to identify the factors affecting investment

dictions on mutual funds, the impact of behavioural factors on an investor and
what are the factors that stop people from investing. Fundamental factors such
as past performance.

62
 CHAPTER 3

RESEARCH METHODOLOGY

63
 3. RESEARCH METHODOLOGY

Research Methodology in this study, we will focus on the subject of

Investors Outlook towards SIP. The methodology is adopted for purpose of
finding the investors outlook towards SIP

RESEARCH DESIGN:

This research is explorative and conclusive in nature because, it aims to

collect the data about the behaviour of investor in which way they invest in
Systematic Investment Plan. This is a descriptive study. Two types of data were
taken into consideration i.e. Primary data and Secondary data. My major
emphasis was on gathering the primary data. The secondary data has been used
to make things more clear.

SCOPE OF THE STUDY:

This study mainly focuses on an investor's outlook towards SIP and how
people are aware of SIP through different sources and their interest to invest in
SIP for the purpose of increasing their savings.

LIMITATION OF THIS STUDY:

1. Area of survey was restricted.

2. Sample size is limited to 50 people only.

64
OBJECTIVES:

The main objective of the study includes various factors that affect the
investment in Systematic Investment Plan. The other objectives include the
study of:

1. Purpose of the investment in SIP

2. Amount of investment in SIP

3. Awareness of investors about the Mutual Fund SIP

4. Sector preference for SIP.

HYPOTHESIS:

Following hypothesis were framed for the purpose of study.

 Ho: Annual income of the respondent and SIP plan of the respondent
are independent.

 HI: Annual income of the respondent and SIP plan of the respondent
are not independent.

 HO: Occupation of the respondent and SIP plan are independent.

 Hl: Occupation of the respondent and SIP plan are not independent

 HO: Amount of SIP and their expectation about the return are
independent.

 Hl: Amount of SIP and their expectation about the return are not
independent.

65
SAMPLING PROCEDURE

 By adopting convenience sampling, approximately 50 respondents were

selected. The essential data were collected by people through
questionnaires.
 It was collected through filling up the questionnaires prepared. The data
has been analysed by using statistical tools.

SAMPLE SIZE:

The sample size of the project is limited to 50 respondents.

SOURCE OF DATA:

Data has been collected through primary source.

DATA COLLECTION METHOD:

A. Primary data

The required data has been collected by the way of survey to general public.

B. Secondary data

The required data has been collected by the internet, books and magazine etc.

SAMPLE DESIGN:

Data has been presented with the help of tables and pie charts.

66
 CHAPTER 4

DATA INTERPRETATION

AND ANALYSIS

67
 DATA INTERPRETATION AND ANALYSIS

AGE

4%
16%

80%

Below 20 20-30 30-40

INTERPRETATION:

As per response of survey, respondent’s age range from below 20 is 16%, 20-
30 is 80%, and 30-40 is 4%.

2.

GENDER

32%

68%

Male Female

INTERPRETATION:

According to my sample size, among 50 respondents 68% are female and 32%
are male.

68
3. Do you have habit of savings?

50 responses

12%

88%

Yes No

INTERPRETATION:

In the above pie charts it shows that 88% people have of savings and 12%
people don’t have habit of saving.

4. How much of your income would you like to invest?

50 responses

12%
2%
44%

42%

5% 20% 30% 40%

According to survey 44% people like 5% of income likes to invest, 42% people
like 20% of their income, 12% people like 30% of their income & 2% people
like 2% of their income to invest.

69
5. How much knowledge do you have in the field of personal finance?

50 responses

14%
6%

18% 62%

Basic Intermediate Advance None

INTERPRETATION:

According to survey 62% people have basic knowledge, 18% people have
intermediate knowledge, 6% people have advance knowledge and 14% have no
knowledge in the field of personal finance.

6.

Which strategies are you use for investing?

50 responses

4%
10%

86%

Systematic investment plan Systematic transfer plan

Systematic withdrawal plan

INTERPRETATION:

As per survey 86% people use Systematic Investment Plan strategy, 10% people
use Systematic Transfer Plan and 4% people use Systematic Withdrawal Plan.

70
7.
Are you aware about SIP?
50 responses

44%
56%

Yes No

INTERPRETATION:
According to survey 56% people aware about Systematic Investment Plan and
44% people don’t know what is SIP.

8.
Do you invest in SIP?
50 responses

40%

60%

Yes No

INTERPRETATION:
As per survey 79% people are invested in SIP and 21% people did not invest
in SIP.

71
9.
By structure in which type of funds have you invested?
50 responses

22%

12%
66%

Open ended funds Close ended funds Interval funds

INTERPRETATION:
In open ended fund structure 67% people invested, Close ended fund structure
10% people and 23% people are invested in interval funds.

10.
If you are invest in SIP then how much percentage of your earning do you
invest in SIP?
50 responses

8%
12%

50%

30%

Upton 5% Upton 10% Upton 25% Above 25%

INTERPRETATION:
As per survey, 52% people invested earning in SIP Upton 5%, 31% people
invested earning in SIP Upton 10%, 9% people Upton 25% and 8% people
invested earning in SIP above 25%.

72
11.
How much percentage of return that you are expecting from SIP?
50 responses

8%

18% 36%

38%

5%- 10% 10%-15% 15%- 20% Above 20%

INTERPRETATION:
In above pie chart 37% people expected returns from SIP is 5% to 10%, 40%
people expected 10% to 15%, 17% people expect 15% to 20% returns and 6%
people expected returns from SIP is above 20%.

12.
How would you like to receive the returns every year?
50 responses

10%

30%
60%

Growth NAV Dividend payout Dividend Re-investment

INTERPRETATION:
As per above chart 60% people receive the returns every in Growth NAV, 29%
people from Dividend payout, and 11% people receive the returns every year
by Dividend Re- investment.

73
 DATA ANALYTICS TOOLS

1. Sharpe Ratio
What it indicates?
This ratio shows the return per unit of the total risk taken by the scheme.
How it calculated?
(Return-risk free return) Standard deviation
Implications for investors:
Compare only within categories. Higher than category average Sharpe ratio
indicates that the fund manager was able to generate higher return per unit of
total risk.

2. Expense Ratio
What it indicates?
This ratio shows the annual expense the fund will charge the investor. It
ranges between 0.1% (for fixed maturity plans) to 3.25% (for small-sized
equity funds)
How it calculated?
Total expenses charged by the fund/average assets under management of the
fund.
Implications for investors:
The lower the expense ratio, the better it is for the investor. Since most debt
funds generate similar.

3. Portfolio Concentration Ratio

What it indicates?
This ratio shows where and how much has the fund invested.
How it calculated?
This is usually a percentage of the fund’s top five stocks or sectors.

74
Implications for investors:
Normal range is 30% - 40% for the top five stocks and 30% 60% for top five
sectors for diversified funds. Investors go to mutual fund for diversification.
Any undue concentration in its portfolio defeats this.

75
CHAPTER 4

SUGGESTION

76
 SUGGESTION

1. People should be aware about SIP.

2. SIP investment is easy and helpful for small investors.

3. The one-time investment gives low return only reason is that the number of
shares they investing in is a lower compare to systematic investment plan.

4. Do not get jittery with short term fluctuation in the market.

5. Increase time horizon to get higher return.

6. Customer education of the salaried class individuals is far below standard.

Thus asset management Company's need to create awareness so that the
salaried class people become the prospective customer of the future.

77
CONCLUSION

78
 CONCLUSION

1. People are aware about systematic investment plan.

2. Systematic investment plan is best for small investors.

3. SIP offer a great way for retail investors to save money for the long term.

4. SIP is a great tool to save money and reduce the risk of investing.

5. Portfolio diversification is best way to reduce risk.

6. SIP in a mutual fund is best for preventing the drawback of investment in

equity and offers high returns.

7. It is easier to contribute small portions of money regularly.

8. In SIP frequency of investment is on regular basis, so the one who earns on

regular basis can easily invest in SIP.

9. Flexible SIP is beneficial for investors as it allows on investor to SIP

amount based financial condition.

10. Majority of investors invest in SIP scheme than lump sum as moderation
of risk is higher in lump sum than SIP.

79
ANNEXURE

80
 ANNEXURE

1. Name

2. Gender
o Male
o Female

3. Age
o Below 20
o 20-30
o 30-40
o Above 40

4. Do you have habit of savings?

o Yes
o No

5. How much of your income would you like to invest?

o 5%
o 20%
o 30%
o 40%

6. How much knowledge do you have in the field of personal finance?

o Basic
o Intermediate
o Advance
o None

81
7. Which strategies are you use for investing?

o Systematic Investment Plan

o Systematic Transfer Plan
o Systematic withdrawal Plan

8. Are you aware about SIP?

o Yes
o No

9. Do you invest in SIP?

o Yes
o No

10. By structure in which type of scheme have you invested?

o Open ended funds
o Close ended funds
o Interval funds

11. If you are investing in SIP, then how much percentage of your earning do
you invest in SIP?
o Upton 5%
o Upton 10%
o Upton 25%
o Above 25%

82
12. How much percentage of return that you are expecting from SIP?
o 5%- 10%
o 10% -15%
o 15%- 20%
o Above 20%

13. How would you like to receive the returns every year?
o Growth NAV
o Dividend payout
o Dividend Re-investment

83
BIBILIOGRAPHY

84
 BIBILIOGRAPHY

 Www.mutual fund.com

 Www.SIP

 Www. Google scholar

 Www. Money control.com

 Www.sebi.gov.in

 Www.mutualfundsindis.com

 Wikipedia

Google form link:

https://docs.google.com/forms/d/e/1FAIpQLSeK2AVwp720os3a3x2lMw
p7zZ7jBMAx7JJclyR1f6jjEE28HA/viewform?usp=sf_link

85