Systematic Investment Plans (SIP)

What is an SIP and What kind of SIP methods one can use

SIP = Systematic Investment Plans. Its the most workable strategy in a Volatile Market but in a good stock.

1. Its a financial Planning in stock market.
2. The word " systematic " is important and means regularly.
3. Planning means thinking on a time frame.
4. Price is apparently not important at the time of investing.
5. Understanding markets movements not important.
6. One have to invest in companies whose management is top class.
7. Last but not the least and the most important.

You have to have patience, patience and more patience. I will try to explain by an example. I hope many of you understands it. Now let me state an example on Wipro that IF someone has runned SIP in it since 1990-2005 on a yearly basis of a small value of just 50K per year.

Year Quantity Rate Rs.( Adjusted Price )
1990 35700 1.40
1991 26300 1.90
1992 14700 3.40
1993 14000 3.65
1994 5800 8.60
1995 4600 10.85
1996 5800 8.60
1997 3100 15.80
1998 820 61.29
1999 115 434.00
2000 125 401.00
2001 187 267.00
2002 184 272.00
2003 172 290.00
2004 134 374.00

Total Quantity of Shares = 1,11,845
Total Investments = 50,000 x 16 = 8,00,000
Current Valuation = 6,30,00,000

Now questions might arise like how do we know that this Company will perform good in next 16 years or so ?? Can you tell me a particular stock in which I can run SIP for a longer time period ? Do you know any future's INFY or Wipro ?

No..I dont know..IF I knew then I would'nt have been here..But yes,I am willing to try and I know IF I will,then I will achieve it one day.

Is starting a 16 years Value buy SIP is right now?
I would say No. Cos we are into bull markets and we wont be able to make higher returns if we wait for 16 years. I would say that run a SIP for next 5 years on a Monthly basis or Fortnight.

Decide a value as per as your convenient and SIP into few particular stock. Make sure that you cover all the 7 points which I discussed above.