What are savings?

Traditionally, savings are what we are left with after accounting for all the expenditures. The priority here is to spend and not to save.

Simply put: Savings = Income – Expenditure

But that is not the true picture as due to inflation, the real value of our expenses goes up and income comes down – in effect the value of our savings reduces.

The solution : Save first and spend whatever is left!

But this is not enough, as due to rising inflation we need to invest smartly so that we grow our savings faster than inflation costs and increase our real savings

Tips for Smart Investing

• Be a disciplined investor :  Disciplined investing means investing regularly and systematically.

• Invest in instruments that beat inflation: Traditional investment avenues no doubt guarantee returns but post-tax returns are lower than the prevailing rate of inflation.

• Invest the savings as early as possible: To save for your future requirements the trick is to invest small amounts regularly which add up over time to become a substantial corpus for our needs.

  Welcome to the World of Systematic Investing - Presenting Principal Systematic Investment Plan (PSIP)

  A Systematic Investment Plan from Principal Mutual Fund (PMF) is a disciplined approach of investing in PMF Schemes which enables you to invest a pre determined amount of money at the applicable NAV based Sale Price on a designated transaction date.

  How do you benefit from PSIP?

  Rupee Cost Averaging

• By investing a uniform amount regularly one can buy more when stock markets are down and less when markets are up - reduce risk associated with one lumpsum investment

• It is an efficient way to participate in equity markets, especially in high volatile stock market without taking too much of risk.

  Power of Compounding

• Compounding is when the returns from your investments add up to boost your returns.

• Greater the returns from the invested asset class, greater are the benefits accrued from compounding.

• An early investor accumulates more than the one who comes in later as the period of your investment compounding increases

  Example: Rs 10000 invested every year in different instruments that give 6% and 15% returns. At the end of 30 years, total investment of Rs 3 lacs will aggregate to Rs 49.99 lacs in an instrument which gives 15% returns vs. Rs 8.38 lacs in an instrument that gives 6% returns

Systematic and Regular Investing - Save for your future

• PSIP works on a simple model: invest systematically and build your corpus for the future. PSIP gives you the opportunity to invest in equity markets through Principal’s wide range of equity products.

• PSIP is designed to accumulate wealth over long-term, without having to keep aside a huge sum of money. PSIP can be started with as little as Rs. 500/-

  Example: Suppose that X & Y invest Ross. 1,000 every month which grows @ 10% p. a. on a monthly compounding basis, X starts at the age of 30 & Y starts at the age 40 and both of them invest till 60 years of age. X's investment would have appreciated to approx. Rs. 20.62 lakh whereas Y's investment would have appreciated to approx. Rs 7.18 lakh.
  Thus X's Investment would have more than doubled by just starting earlier than Y.

Convenience

• PSIP is a stress free way of investing regularly. You do not have to fill an application form every time you invest.

• Submit application form, SIP form with an initial cheque along with a copy of your PAN card / KYC acknowledgement letter (where applicable), and do subsequent SIP installments through an Auto Debit Facility through ECS or Standing Instruction (SI) facility or give Post Dated Cheques along with your application. Your account gets automatically debited on a date of your choice or give monthly or quarterly post dated cheques for the amount you desire to invest.

  So, plan for the future and get relieved from day to day investment worries. Build your investment through this time tested mechanism.

How to make PSIP work for you?

It makes good sense to start investing early and invest a fixed amount regularly depending on your investment objectives. Here our some steps to follow:

. 1.Set your financial goal – Investing to buy a house / car, vacation, child’s education or retirement corpus

2. Identify the scheme – – Consult a financial advisor to plan your asset allocation effectively in equity, debt and balanced schemes keeping in mind your investment objective and risk profile

3. Decide the SIP Amount – The amount you would like to invest every month / quarterly after paying all mandatory expenses (house rent, bills etc)

4. Have a long-term commitment – PSIP is most effective when opted for a longer period of time as compounding not only adds your investments every month but also the returns on your investments.

5. Aim for the big picture – Market fluctuations are a way of life. Stay focused on your goals and invest; irrespective of market conditions. To get the most out of PSIP, start today. The sooner you start, the earlier you reach your financial goals.

6. Start Investing – After all the planning, take the first step and get all the forms and submit the same with all other documents required. Let your investment journey begin!!