Long-term investing has been a tough strategy to follow for investors since 2008. Even now, many stocks are down 70-90 per cent since their 2008 highs. Only a few have done well, due to their fundamental strengths and better growth rates.
Here Are the Top 3 Things You Need To Know About SIP Investment Plan :
- SIP acts as an automatic market timing mechanism! It forces you to buy more units when the price is down and fewer units when price is up. So, you reduce your average cost of purchase of shares or mutual fund units over its highs and lows, thus enhancing the returns .
- SIP Plans help in inculcate regulation in your saving practice, by investing a minute sum of money in SIP Plan every month, you can accrual a large amount without straining yourself by Beat Systematic Investment Plan.
- SIPs also help you leverage the power of compounding, which in turn entail that the earlier you start saving, the faster your money multiplies. Over time, the impact of this steady investment is extraordinary.
” I generally don’t prefer to invest as SIP in any stock since we don’t want to buy even quality stock at high valuation. But If I have to invest with SIP rule for next 10 years just for amusement; I would recommend “
⇒ Duration of SIP Investment – 12, 18, 24, 36 months.
Top 3 Stocks For SIP >
⇒1) Reliance Industries
The Reliance stock which delivered a compounded annual growth of 33 per cent during FY1998-2008, has fallen 23 per cent since the global crisis broke out. Pressure in global petchem & refining segments, the gas business not yielding expected results and investments in telecom and retail yet to yield returns have led to consolidated return on capital employed declining from 19.5 per cent in FY08 to 10.8 per cent in FY13. The trend, however, is likely to change. RIL is investing Rs 150,000 crore over three years across businesses. A large chunk is allocated to petrochemicals, where capacity is projected to increase 67 per cent to 25 million tonnes (some projects have already gone on stream).
Positively, the shale gas business has been yielding good results (operating earnings up 40 per cent year-on-year at $462 million in the first nine months of FY14), while retail profitability is also improving. RIL expects retail revenues to rise from Rs 10,000 crore to Rs 50,000 crore in the next few years. Oil and gas should also see gains, say analysts, led by higher gas prices from FY15 and likely new discoveries.
In sum, the low-yielding cash balance (Rs 89,000 crore), along with RIL’s annual profits of Rs 20,000 crore, when invested in better-yielding core businesses should lead to higher return ratios and better valuations. After an estimated five to seven per cent earnings per share growth in FY14, analysts expect earnings to grow by 12-14 per cent in FY15 and FY16.
ITC’s cigarette business has been a cash cow and will remain so. Strong pricing power has helped it pass on tax/duty rises to consumers and deliver healthy profit growth. Notably, the surplus cash invested in new growth areas like fast moving consumer goods (FMCG) are showing results. The latter business, wherein ITC is among the top entities in quite a few of the segments it operates in, reported profits for the second time in its lifespan (December 2013 quarter). Growing in excess of 15 per cent, this business with annualized revenue of over Rs 7,500 crore in FY14 should report profits from FY15 onwards.
“With improving profitability in the foods segment (over 65 per cent of the FMCG business) driven by higher margins in biscuits and staples, the other FMCG segments are emerging stronger. Personal care products are also gaining good traction in key categories,” noted Vanmala Nagwekar of IIFL. ITC is investing heavily in brand building and plans to enter new categories (dairy, juices), which will further drive growth. It aims to generate Rs 100,000 crore of revenue (17 per cent compounded annual growth) from its non-cigarette FMCG business by FY25-30, says Nagwekar.
Except hotels, the other businesses (paper, agricultural products) are doing well. With low capex needs and profits seen growing by at least 15 per cent annually in the coming years, investors can expect good stock returns.
⇒3) Larsen & Toubro (L&T)
Annual orders are more than 50% of indian govt infrastructure spending. Building india in different sector like urban transport, railway, technology and defense.
SIP Calculator :
How To Invest in SIP :
|One-time Investment||SIP Investment|
|In one time investment the investors need to invest a lump-sum payment during the tenure of investment.||Sip investment includes period investment, where the investors can invest a fixed amount per month in the fund option of their choice.|
|One-time investment earns better returns on investment at the time when market performs high.||SIP investment earns better returns on investment at the time when market performs low|
|One-time investment can result to loss at the time of market fluctuation.||With the benefit of rupee cost averaging SIP investment helps to deal with the market crash|