Skip to main content

HNIs & Investing Through SIPs

Image
By

We advisors categorize our investors under two categories – a) those who have limited savings and they invest their savings to meet their financial goals & b) those who have surplus and their sole objective is to earn better returns to add more wealth. The first category is known as retail clients and second category is regarded as High Networth Individuals or HNIs.

Investment products and the mode of investment differ for both categories. HNIs can take higher risk compare to retail investors and can invest in products that require larger fund allocation for investment. It is well established fact that in longer run barring few exceptions equity market offers much higher returns than any other asset class. They also offer much better liquidity and one can invest very small amount into the same. And the fact that it also offers facility of partial redemption makes it more attractive investment destination.

One of the modes of investment into equity mutual funds is investing through systematic investment plan or SIPs. One can start investment into equity mutual funds with as small amount as Rs.500/- per month. Because of this reason for long this mode of investment was regarded as poor man’s requirement and HNIs largely have shied away from investing through SIPs.

Everybody chants the mantra “Invest at low and exit at high”. It is now an established fact that while you may be successful in timing the market 8 out of 10 times but the two times missed costs you heavily and take away good portion of profits that you earned on successful bets. And many a times in their pursuit to earn higher returns based on their gut feelings and prediction from many media experts, investors overexpose themselves to a particular asset class which exposes them to unwarranted higher risks.

Beauty of SIP is that using this mode of investment an investor unconsciously time the market and in much better way. This is known as power of averaging. It is because you are investing at low levels also if markets are going down and exit only when you have achieved your target.  Slowly & slowly HNIs have also started recognizing this power of SIPs.


Our investors are going a step further to use this power of SIPs to create wealth and to maintain balance between debt and equity. We have advised our clients to invest into high yield, good quality bonds and other debt instruments that pay regular interest. They invest the interest proceeds they receive to invest through SIPs into equity mutual funds. This way they are not only able to preserve their capital but also create good wealth benefiting from the returns earned from equity markets.

Comments

Post a Comment

Popular posts from this blog

This Republic Day Write Your Own Financial Constitution

By
“Constitution is not mere a lawyer’s document, it is a vehicle of life and its spirit is always the spirit of Age” – BR Ambedkar A constitution primarily is a document that details the rights, obligations, privileges, duties and responsibilities of the people living within the corridors of, and leading that country. It details the rule of governance. Without a constitution it will be difficult to live like a civilised society. We would be living like in stone-age where “Might was Right” and jungle raj prevailed all over. Like a country, each individual should also have his or his family’s own financial constitution detailing various financial objectives and the process to achieve those financial objectives, rules that will govern the way its finances will be managed etc. This applies to all individuals without exception and is more popularly known as “Financial Plan”. Like a constitution your financial plan should have a Preamble and different schedules. Preamble -
Post a Comment
Read more

Time or Timing – What is more important with Sensex @ 64K

By
  The Stock Market is the device to transfer wealth from the IMPATIENT to the PATIENT. After swinging in a range for almost one and half years, markets breached their previous peaks and are scaling new one now. Markets have risen by almost over 14% in last three months. Major reason for this sudden rise is the return of FIIs to the Indian stock markets following the fact that India is the fastest growing economy and growing over 6% despite covid, global economic slowdown and geo-political tensions. We invest for long term and everyone knows in the long run markets will go up irrespective of intermittent shocks like scams, dot-com bubble, Lehman crisis, covid or banking troubles in USA etc. Following picture depict the journey of Sensex over 40 years since its inception.   Source; www.thenwsmen.co.in The unfortunate part is we are more concerned about the short term movements of the markets. Every time there is sudden rise or fall in them market we are gripped more by fear and l
Post a Comment
Read more

On Cross Roads

By
“We cannot truly plan, because we do not understand the future- but this is not necessarily a bad news. We could plan while bearing in mind such limitations. It just take guts.”- Taleb:   Propounder of The Black Swan theory. Pessimism that set in March, still persists in our minds. In fact it has deepened with growing number of Covid cases being reported. The largest question ruling our minds today is - Shall we ever be able to overcome it…………..     and if yes by when and how? Have we ever wondered how have the Indian culture survived for so many thousands of years, how come so many Indians who were transported as labourers to many African and European countries centuries ago are now ruling the roost or how come most of the top 20 firms in the world have Indian heading them and so on……….. The only reason to above and many such questions is our “ Ability to Adapt ”. We are fast learner and very quickly adapt to new situation. Indians enjoys six different weather in a yea
3 comments
Read more

Markets Tumbling, Recovering – What to do??

By
Markets Tumbling, Recovering – What to do?? "The best time to plant a tree was 20 years ago. The second best time is now." - Chinese proverb. In times like present most people flock towards safety. Most do it because they don’t know how long this doomsday atmosphere will last, some even feeling like there will be No Tomorrow. But hunger for good returns on our investment never ceases. Kin Hubbard satires, "The safest way to double your money is to fold it over and put it in your pocket." On investment and earning good money from them, Warren Buffet – the legendary investor says, "If I buy a farm, I don't know whether there's going to be drought next year, but I know that there are not going to be 20 straight years of drought, and I know there's not going to be 20 straight years of great rainfall." It is a proven fact that no matter what, in long term best returns come from stock markets only. And as Seth Klarman says, “The stock mar
1 comment
Read more

Have You Missed Boarding the Bus

By
  "The market does not trade upon what everybody knows, but upon what those with the best information can foresee" – William Hamilton Russia-Ukraine conflict had clouded the stock markets worldwide giving speculations to the talks like possibilities of third world war, Russia heading for deep financial crisis, energy crisis looming large over Europe etc. With Russia-Ukraine conflict seems getting settled and much to the pleasure of Russia – the Super Power, this has now become a non-player for the markets until some significant deviation happens from the present stance taken by all major countries of the world. Present is the world of instant. We want everything instant and so are our reactions. In the age of internetted social life, dissemination of information is highly fluid. And over 99% of these netizens have mastered the art of forwarding such information without verifying if it’s a news, noise or manipulated agenda of some interested parties.   Most economies in
1 comment
Read more