Build Wealth One SIP at a Time
Saving for a long-term financial goal, such as your child’s education, or for retirement, can be as easy as starting a systematic investment plan (SIP). Under SIP, you invest a fixed (small) amount of money at regular intervals in a mutual fund scheme of your choice. The minimum amount can be as small as Rs500; the frequency of investment may be daily, monthly or quarterly. 
Equity mutual funds have delivered excellent returns over the past 10 years. The returns, over certain periods, on a point-to-point basis, may not have been great; but investing in best-performing schemes through SIP would have delivered superb returns.
Take, for example, the returns of the Sensex from December 2007, when it first crossed the 20,000 mark, to October 2014. Over this period, the Sensex gained 37.33% (annualised: 4.71%)—from 20,291 on 11 December 2007 to 27,866 on 31 October 2014. So, if you had invested Rs2.70 lakh in December 2007, the investment would have been worth Rs3.71 lakh in October 2014. Not great. On the other hand, had you invested Rs10,000 every quarter, your investment of Rs2.80 lakh over the 28 quarters would be worth Rs4.59 lakh, an absolute return of 64.01% (annualised yield: 13.88%). Had you invested systematically in a top mutual fund scheme, your returns would have been even higher.
How did SIP deliver better returns? SIP enabled you to buy more units when the market was lower and fewer units when market went higher. Thus, the average cost of units was lower than the initial purchase price per unit. In the same example, an investment of Rs2.70 lakh on 31 December 2007 would have given you 13.30 units. However, investing Rs10,000 systematically would have given you 16.48 units as you would have bought more units when the market went lower.
SIPs are a logical method for individuals to keep their investment goals on track. We earn every month; we spend every month; we save every month; we should also invest every month. To gauge the efficiency of a SIP, one should give at least three to five years. Staying invested only for a year may affect your returns. Fund performance analysis over a period of five years proves that SIP works well over most five-year periods, ironing out market volatility during such long periods. Therefore, starting a SIP would be a smart way to save regularly for long-term goals. However, do keep in mind that SIP may not help you if your selection of the mutual fund scheme is not right. Choose wisely and invest regularly.


Fix Your Finances
Money is one of the most important facets of our lives. Most of us work hard primarily for money and money is what helps us live a life we aspire for. And, yet, managing our finances is one of the most vexing issues we face. Why is this so? For a start, financial products are boring and complex.
For the average saver, to understand everything—from surrender charges of life insurance policies, to inflation-adjusted value, is tough. The regulators and policy-makers tell you to get financially educated; but, is this practical? 
Then we have too many products to choose from: thousands of mutual fund schemes, hundreds of insurance products and fixed-income products, thousands of actively traded stocks… etc. Where is the time to deal with all this? The only time we can fix our finances is over the weekend. But the weekend is for friends and family and leisure. Who would want to waste it on figuring out financial products? Especially, when the field is so vast and confusing. It is, therefore, common to find even otherwise smart people, financially confused.
Hence, we decided to check with our readers how financially savvy they are. The results of the survey, of over 1,000 readers, form our Cover Story this time. Turn to page 30 and check where you stand vis-à-vis important financial questions.
Recently, Robert Vadra was captured on camera angrily asking a TV reporter ‘Are you serious?’ when questioned about a possible investigation against him for his land deals. This clip was played a million times on TV. Sucheta picks up that now-popular phrase to ask government officials and financial regulators are they serious about their concern for citizens or consumers?
Don’t miss this piece on page 16. In her Crosshairs section, Sucheta comments on how the Modi government, like the previous governments, has stepped in to bail out cooperative banks with taxpayers’ money.
As always, do write in with your suggestions and spread the word about our free helplines. 


Nifty, Sensex will face selling at higher levels – Thursday closing report

Nifty needs some strongly positive news to rally higher and sustain it


Out of the past three trading session, the NSE’s CNX Nifty managed to reach two new life time highs but the moves were weak. We had been mentioning for the past week that the index is struggling to move higher and is most likely to give up gains. Today the index closed in the red.

The S&P BSE Sensex opened at 28,049 and was followed by a range bound session for little while when it hit its intra-day high at 28,099. Nifty opened at 8,405 and hit its high almost at the same level. Immediately, the indices plunged in to the negative.


Efforts to revive did not succeed. Sensex hit a low at 27,823 and closed at 27,941 (down 68 points or 0.24%), while Nifty hit a low at 8,320 and closed at 8,358 (down 25 points or 0.30%). The NSE recorded a volume of 97.76 crore shares. India VIX fell 4.40% to 13.8000.

The government will unveil WPI inflation data for October 2014 on Friday.

The government has raised the excise duty on petrol and diesel by Rs1.50 a litre to mop up additional revenue of about Rs13,000 crore.

Reports, quoting Minister of State for Commerce and Industry, Nirmala Sitharaman said that India and the US have resolved their differences on public stockholding of food and this opens the way for implementation of the WTO trade facilitation deal.

Coming back to markets, Amtek Auto (8.67%) was the top two gainers in ‘A’ group on the BSE. It has been reported that it has plans to diversify into new areas such as aerospace, railways and oil and gas by utilising its core forging and casting business.

Bajaj Electricals (11.53%) was the top loser in ‘A’ group on the BSE. It posted weak September 2014 quarter result which pulled it lower today.

Infosys (1.77%) was the top gainer in Sensex 30 pack. the stock hit its 52-week high today. Infosys is apparently in the race to acquire CIMPA, the engineering services unit of Airbus. However, the company clarified on BSE that such news is a speculative one.

Sesa Sterlite (2.50%) was the top loser in Sensex-30 stock. It announced that it would invest $782 million over a three-year period in southern Africa to tap the region's large undeveloped deposits of the metal. The amount will be used to develop an open pit zinc mine in Gamsberg, South Africa, as well as the conversion of the Skorpion Zinc refinery in neighbouring Namibia.


US indices closed Wednesday flat.

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said on Wednesday financial markets could face less than placid waters in coming years. In his formal remarks, Mr Kocherlakota repeated his belief that a US central bank rate increase next year would be a mistake. Inflation is unlikely to reach the Fed’s 2% target until 2018, and because of this outlook, “it would be inappropriate for the [Federal Open Market Committee] to raise the target range for the fed funds rate at any such meeting” occurring in 2015, he said.

Asian indices showed mixed performance. Nikkei 225     (1.14%) was the top gainer while NZSE 50 (0.46%) was the top loser.    

China's industrial output growth in October unexpectedly dropped, reflecting the continued headwinds faced by the Chinese economy, official data showed today.


Value-added industrial output in China rose 7.7% in October from a year earlier, slowing from an 8% on-year increase in September, the National Bureau of Statistics said.


Industrial production increased 0.52% in October from September. In September, it had climbed 0.91% from the preceding month.

China's retail sales rose 11.5% in October from a year earlier, slowing slightly from an 11.6% on-year increase in September. Retail sales increased 0.98% in October from September. In September, retail sales had risen 0.86% from the preceding month.

European indices were trading in the green. US Futures too were trading higher.

Germany's inflation rate was confirmed flat at 0.7% in October.


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