Systematic Invest Plans- For Better Returns

Date Funds
People with risk taking capacity can earn far better on their investment through systematic invest plans (SIP). However, all investment plans are related to market so chances of loss or low margins cannot be ruled out. For your information, when you subscribe to any such plans one of the standard questions among other formalities is, ‘how would you react if your investment reduce down by 20% by the end of next year or would you still be holding if your 10,000 goes down to 8,000? But that should not be deterring factor for people who can take moderate to aggressive risk in order to earn good profit.

Introduction for new entrants
Systematic Investment plan, as the name suggests is way to earn a good return that earns you better returns compared to small term fixed deposits and more so when the interest rates are going down. You must be well aware that Reserve Bank of India has already reduced repo rate thereby effecting interest rates on deposits up to some extent and if the same trends were to go on the rates of interests will go down for sure.

The date funds
Date funds are basically mutual funds scheme that is managed by professionals in Bonds, Commercial Papers, that according to global financial market is a promissory note (unsecured) having a fixed pre-maturity limit (maximum 270 days) and certificate of deposits such as in government investment schemes. Most of these date funds earn 10% or more at an average depending upon the duration you stay invested.

Why Date Funds
Small investment plans reduce the risk of loss compared to investment in shares but the returns in SIP are based on interest rates, the movement of markets register heavy up or down trends that is when the interest rates go up the profit in date funds go down but when the banks reduce the rates the date funds register a better profit. Therefore, investment in date funds which is a systematic process of investment with multiple deposit options reduces the risk in case the markets register a sudden heavy fall at the same time you earn a good amount if the market goes up. However, we can say the SIP is one of the better saving options for younger professionals.

Note- SIP is not suggested for persons dependent on earnings from interests.