Many of us just save. We don't accumulate. Even If we accumulate, though we are concerned about returns but do not think about Wealth Creation
Mutual Funds with established track record of many years have the option that covers many of known and unknown worries of the investors. Some features of SIP are as under:

Riding through market volatility

Checklist of Wealth Creation through SIP

Scheme Name 5 Years 7 Years 10 Years
Axis Equity Fund(G) 19.80 % - -
Birla SL Frontline Equity Fund(G) 21.95 % 20.56 % 18.51 %
Franklin India Prima Fund(G) 31.66 % 28.31 % 20.84 %
HDFC Equity Fund(G) 20.05 % 20.45 % 18.25 %
HDFC Mid-Cap Opportunities Fund(G) 30.11 % 28.73 % -
ICICI Pru Top 100 Fund-Reg(G) 19.51 % 18.24 % 15.74 %
ICICI Pru Value Discovery Fund-Reg(G) 30.77 % 29.82 % 23.78 %
Reliance Equity Opportunities Fund(G) 25.56 % 25.80 % 21.28 %
SBI BlueChip Fund-Reg(G) 23.71 % 20.60 % -
UTI Mid Cap Fund(G) 33.94 % 29.79 % -
Sr no. Parameter SIP
1 Continue to save and invest as long as you are earning
2 Do not stop or break the SIP irrespective of market conditions
3 Always go for perpetual SIPs. You always have the flexibility to add more or exit
4 Shift to safer options only 1 year before the goal
5 Allocate funds into a combination (largecap, midcap, value funds, etc)
6 Reduce expenses, not savings.
7 With every increase in earning, increase your Savings amount by atleast same proportion
8 Attach every SIP with a goal and vice versa.

Ease of Transaction

 

One time instruction about amount to be invested, frequency of investment and how long you wish to save.

More Beneficial in volatile Markets

 

Many investors try to catch the bottom and exit at peaks, which is very hard to catch. In SIP, every dip gets you more units and every rise increases the valuation of your holdings.

Flexibility of entry and exit

 

With open-ended nature of mutual funds, SIP satrategy provides the investor to buy additional or exit (in part or full) at any point in time.

Best way to time the market

 

You don't have to worry about the market levels, as funds are automatically invested at every level. Thus, getting you averaging of market valuations.

Forced Habit of Saving

 

We generally tend to spend our savings in some or other life style expenses. Being an automated process and attachment to goal, makes SIP a forced habit of savings. Results of the same are visible when goal is achieved.

Tax Efficiency

 

As per current tax law, any investment held for more then 1 year in equities fund is not liable for long term capital gain tax. Thus, all long term profits from SIP in Equity Funds are tax Free.

Vehicle for every financial goal

 

We should do a reverse calculation for every financial goal like - child's marriage or education, self retirement or even vacation planning . Depanding upon the goal value, SIP amount should be decided and continued till the goal year.

*Calculated on 17-Apr-2015
# SIP is a concept and not name of any scheme
Note: The returns are calculated assuming investment in Growth option.
Source: ACEMF