Pune laps up systematic investment plan

Some call it the small investors' portfolio, while others describe it as specific investment procedure. The systematic investment plan (SIP) has started gaining an increasingly higher response from retail investors in the city.

Records available with Pune's broking houses reveal that investments in SIPs in the city have grown 400 times during the last four years, and more and more individual investors are choosing the SIP route to invest indirectly in the equity market.

Retail investors find SIP a simple and safe mode of investing in equity shares. An investor does not need to start with a huge initial investment to deal in equities. Anybody can start investing in the stock market via the SIP route. An amount of Rs 500 per month is enough.

Also, the investor does not have to worry about the daily ups and downs in the stock market, as expert fund managers from asset management companies and mutual funds take care of that part.

So, at the end of a year, even if one does not get very high returns, SIPs give out decent profits to retail investors, regional heads of various broking houses said. SIP is just like a recurring account with a bank. In SIP a fixed monthly amount is handed over to a broking house or mutual fund house through 12 post-dated cheques.

Now, one can even opt for auto debit facility, which works like an electronic clearing system (ECS). The broker of fund manager invests that amount in the equity market and makes gains, depending upon his expertise and overall market condition.

Ganesh Prasad Prahdan, director, Sajag Securities, said, "SIP is considered the most disciplined investment. Under SIP, one can get the benefit of market fluctuations easily.

During the last 25 years, it has been proved that one can surely get 100 per cent returns on investment after five years through the SIP option.

Due to so many advantages, retail investors have eagerly started investing in equity markets through SIP mode. In 2004, the number of SIP account holders with Sajag securities was 300, which has reached 1200 today, Pradhan said.

"SIP is no longer a game of retail investor, even investors in the higher income groups have started considering it as an option," said Harshal Kulkarni, regional manager, Fortis Securities.

"SIP secures an investor from risk involved in direct trading, while giving the same chunk of return on investment," he said.

Fortis Securities is currently providing SIP service to about 5,000 investors, he said.