What is SIPs | How does Systematic investment plan work

How does a Systematic investment plan (SIP) work?

Retirement Plan

How does Systematic investment plan (SIP) work
The year was 1990. A joint family of 10 people (two brothers, their wives, and children alongside their parents) was living happily with limited means.
It had been a period of a closed economy, limited access to global products and aspirations were limited. 
It had been a period of a joint family with lower expenses and better savings.
In 2016, we are talking about relatives, children staying far away from parents thanks to higher studies and employment opportunities, increased cost of drugs thanks to the advancement of life science, and more stressful life.

Systematic investment plan (SIP) work

Parents retiring today are more hooked into their savings to measure through their retired life than getting hooked into their kids.
Imagine if this is often the scene today how would be our retired life 15-20 years down the road.
This creates a scary picture ahead folks today. To show your retirement the simplest period of your life by living for yourself and do everything that you simply haven't been ready to do.
During your working life or to form your retirement a painful nightmare depends on how you propose for it is in early years of life.
The common point is money loses its value over a period of your time. 
A rupee value tomorrow is going to be less than the rupee value today, courtesy a monster called inflation.
So inflation becomes the only most vital factor to plan for retirement.
Now you'll argue that one can hamper on his/her expenses during retirement life, but this is often easier said than done.
Imagine are you able to pass by a conveyance once you retire when for the whole of your life you've got commuted in your personal car. 
How does Systematic investment plan (SIP) work
Are you able to move to at least one BHK apartment in a suburb when for your entire working life you've stayed during a three BHK apartment, in the middle of the city?
So instead of putting yourself during a situation where you've got to chop down on your expenses, it's better to plan for your retirement.
Medical Bills: Medical cost has become the only most vital component of monthly expenses during the retirement period.
With the growth within the economy and advancement of medical facilities, this cost is merely likely to travel up with every passing year.
Changing lifestyles is additionally affecting our health.
How does a Systematic investment plan (SIP) work?
Our previous generations wanted to walk a few kilometers during the day while Today, we use vehicles, albeit we would like to travel to the grocery shop.
Private sector hospitals are arising with the latest but expensive medical facilities. This may surely increase our medical bills to go forward.
Life Expectancy: With a better quality of life and medical facilities, the anticipation of the average Indian has gone up to 80 years. 
So if one is retiring at the age of 55 he/she has another 25 years to survive during his/her retired life.
This is often almost like his/her working life. This increases the importance and requirement of proper retirement planning.
No government Support: Unlike the US and The UK where they need government-supported old-age pension schemes and state pension respectively as Social Security benefits during retirement.
The government of some countries does not provide such benefits.
So again you're on your own. There are only a few government employees and selected private-sector employees who get pension after retirement, leaving the majority of the workforce on their own.
How does a Systematic investment plan (SIP) work?
How does Systematic investment plan (SIP) work


The approach towards building retirement corpus: The basic things to recollect is started as early as possible and invest in the right asset class.
The most important advantage of starting early is the power of compounding. For e.g. Mr. X and Mr. Y both want to retire at 55 years aged.
Mr. X starts investing when he's 25 years aged. So, he has 30 years to create his retirement corpus. Albeit he invests only Rs.5000 p.m. in equity open-end fund that provides him 15% return p.a.
His money can grow to Rs.2.82 cr at the top of the 30th year. Mr. Y starts investing when he reaches 40 years old.
So, he has 15 years to create his corpus. He starts with a monthly investment of Rs. 10000 in an equity fund on which he earns a 15% return.
Although his investment value is fourfold above Mr. X his end value would be only Rs.62 lakhs. This shows the facility of compounding.
How does Systematic investment plan (SIP) work
Conclusion:
For every one among us a ten-letter word, 'retirement' brings images of sitting within the garden of your house together with your life partner, twiddling with your grandchildren while reading the morning newspaper.
Taking your wife to the holiday on a far off location per annum. To form this reality, one requires proper planning for his/her retirement.
Retirement planning will change your mindset from 'I would like a cheerful retired life' to 'I will be able to have a cheerful retired life.”

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