Unit Test Paper Solution August Std 3 to 8
Systematic investment plan (SIP): Disciplined method of long term wealth creation
We have our meals at least twice a day. We expect our kids to study every day. We are always told to exercise regularly. Though we are paid once in a month, we have to work five or six days a week. You cannot have a ‘six-pack’ body by working out once in a while. Most students cannot secure good marks in the exam by studying once in a blue moon. Being regular is the way to success. If it is true, then why it should not be the case with investing?
Welcome to the concept of systematic investment plan. Put simply, you sign for a series of investments at a pre-defined frequency in a mutual fund scheme. It helps you save at regular interval as per your convenience and build a large corpus over a period of time. Since most of us earn monthly income, the more popular form of SIP comes in the form of monthly investments in mutual fund schemes wherein investors allow mutual funds to collect prescribed sum on a particular date from the saving bank account and invest in mutual fund scheme. You can have a daily, weekly, monthly or quarterly SIP, depending on your cash flows. Before we jump into the benefits of SIP, let us see how it works.
Here is a typical case*. You have chosen to invest Rs 10,000 per month. The NAV or net asset value (fair price) of the unit keeps fluctuating as the market fluctuates. Thus during the year, you would have invested at both lower and higher points, allowing you to average your per unit investment cost. Assume that over a period of 12 months, the NAV has increased by 10%. However, your overall investment cost would have been Rs 9.84 per unit due to cost averaging. This has ensured that you enjoy better absolute return of investment of Rs 12.37%. Put it straight, you could take more money home.
Unit Test Paper Solution August Std 3 to 8
*For illustration purpose only.
To check how much wealth you can accumulate over the years, with our SIP Calculator
With this example in mind, let us understand the benefits of SIP:
Rupee cost averaging: The phenomenon of reducing the average unit price in a volatile market through investments spread over a period of time is called rupee cost averaging. Over a period of time as the markets go up you stand to make money.
Convenience: You choose the frequency of your investments and the amount of investments. With as little as Rs 500 per month, you can start your journey of long term wealth creation. You can enrol for an SIP online in minutes or by signing an SIP form. No need to fill and sign forms each month. It is automated and keeps you in the loop when each transaction is carried out.
Disciplined approach to ride market volatility:
You remain committed to your investments plan. Irrespective of market volatility, your investments keep buying units. With fall in NAV due to market fall, you get to buy more units. This discipline pays you in long term as market gains.
SIP thus can be a key to your long term wealth creation and financial freedom. Mutual fund investments can be rewarding for disciplined investors and the best way to do it is through systematic investment plan.
The first step in the SIP process is to open the website of the mutual fund house, wherein the investor wants to invest. The homepage of the website will contain a link to proceed with an investment transaction which may read as ‘Invest with Us,’ ‘Make a Transaction,’ Invest Now’ etc. and the text may vary with different mutual fund website.
Unit Test Paper Solution August Std 3 to 8
The first page will typically prompt the investor to input the PAN (Permanent Account Number). The system checks the status of the investor with the help of PAN, as it is a 10-digit unique identification number issued by the Income Tax Department. The system checks for the existing investments of the investor and check the KYC registration status for the investor.
If the investor is an existing investor and has completed KYC with any other mutual fund house, the KYC status will show as registered/verified for the investor and the investor may proceed with the investment process. However, if the investor is investing for the first time, he/ she will be required to complete the KYC process. The KYC verification process may also be sometimes completed online. Once the investor has completed the KYC process, he/she may continue with the investment process.
Moving ahead with the investment transaction after KYC verification, the investor will be required to input further details as necessary for the transaction to be processed, which among other things include the name of the mutual fund scheme and plan/option, amount of investment, details of the bank account, nomination details etc.
Once the investor has provided the above details, the portal will further confirm if the investor wants to make a lump sum investment or SIP investment. If the investor wants to register a SIP, further details like the number of SIP installments, the date on which SIP investment must be made; SIP amount, periodicity of investment, etc. must be entered.
Once the investor has entered all the requisite details, the system redirects to the payment gateway for the payment of the first SIP installment. This step tends to vary with different fund houses, wherein some of the fund houses may redirect towards the payment for SIP installment, while the others treat the SIP registration confirmation as confirmed by the investor and process the first SIP installment as per the SIP details.
If the payment process has been initiated and completed, the investor will receive a transaction confirmation on the screen along with the time stamp. Further, the confirmation will also be received on the registered email address. The transaction confirmation page/ email will also contain a SIP Registration Reference Number, with which the mutual fund house identifies the SIP details.
Registration of Mutual Fund as Biller with Registered Bank Account
The process for SIP registration does not stop with the registration of such SIP with the mutual fund house. A mandate is also required to be given to the bank for payment of the requisite installments towards SIP investments. As such, the SIP must be registered with the bank through the BillPay mechanism, wherein the investor logins into the net banking portal of the bank and registers the mutual fund as the biller. The portal will also ask for the Reference Number, wherein the investor must input the SIP registration reference number as received from the mutual fund house. This helps the mutual fund link the specific SIP with the bank and automates the SIP debit process, as the reference number continues to stay unique for different SIP registrations.
Unit Test Paper Solution August Std 3 to 8
Once you register the biller, the bank will share the details with the concerned biller, i.e., mutual fund and validate the same. Further, the biller will submit the periodic SIP amount for payment as per the date specified by you during the SIP registration. However, the bank account, by default, does not pay the bills registered under your billers. Accordingly, the investor must set an autopay mandate in the net banking login, so that the bill is paid automatically when the mutual fund presents it for payment and the investment is made as per the SIP so registered.
Now that you know how to start SIP take a step ahead in executing the above procedure to register a SIP right away and move a step close towards accomplishing your financial goals.
Power of compounding:
As you invest in small amounts at regular intervals for long term, power of compounding works in your favour.
Marrying SIP with financial goals:
If you attribute each of your SIP to your financial goals, you can track your progress towards achieving your financial goals. Keep saving and you will be home.
SIP thus can be a key to your long term wealth creation and financial freedom. Mutual fund investments can be rewarding for disciplined investors and the best way to do it is through systematic investment plan.
Initiating the Registration Process
The first step in the SIP process is to open the website of the mutual fund house, wherein the investor wants to invest. The homepage of the website will contain a link to proceed with an investment transaction which may read as ‘Invest with Us,’ ‘Make a Transaction,’ Invest Now’ etc. and the text may vary with different mutual fund website.
Unit Test Paper Solution August Std 3 to 8
Validating the Investor Status
The first page will typically prompt the investor to input the PAN (Permanent Account Number). The system checks the status of the investor with the help of PAN, as it is a 10-digit unique identification number issued by the Income Tax Department. The system checks for the existing investments of the investor and check the KYC registration status for the investor.
KYC Registration Process
If the investor is an existing investor and has completed KYC with any other mutual fund house, the KYC status will show as registered/verified for the investor and the investor may proceed with the investment process. However, if the investor is investing for the first time, he/ she will be required to complete the KYC process. The KYC verification process may also be sometimes completed online. Once the investor has completed the KYC process, he/she may continue with the investment process.
Investment Details
Moving ahead with the investment transaction after KYC verification, the investor will be required to input further details as necessary for the transaction to be processed, which among other things include the name of the mutual fund scheme and plan/option, amount of investment, details of the bank account, nomination details etc.
Entering SIP Registration Details
Once the investor has provided the above details, the portal will further confirm if the investor wants to make a lump sum investment or SIP investment. If the investor wants to register a SIP, further details like the number of SIP installments, the date on which SIP investment must be made; SIP amount, periodicity of investment, etc. must be entered.
Payment for the first SIP Installment
Once the investor has entered all the requisite details, the system redirects to the payment gateway for the payment of the first SIP installment. This step tends to vary with different fund houses, wherein some of the fund houses may redirect towards the payment for SIP installment, while the others treat the SIP registration confirmation as confirmed by the investor and process the first SIP installment as per the SIP details.
Transaction Confirmation
If the payment process has been initiated and completed, the investor will receive a transaction confirmation on the screen along with the time stamp. Further, the confirmation will also be received on the registered email address. The transaction confirmation page/ email will also contain a SIP Registration Reference Number, with which the mutual fund house identifies the SIP details.
Registration of Mutual Fund as Biller with Registered Bank Account
The process for SIP registration does not stop with the registration of such SIP with the mutual fund house. A mandate is also required to be given to the bank for payment of the requisite installments towards SIP investments. As such, the SIP must be registered with the bank through the BillPay mechanism, wherein the investor logins into the net banking portal of the bank and registers the mutual fund as the biller. The portal will also ask for the Reference Number, wherein the investor must input the SIP registration reference number as received from the mutual fund house. This helps the mutual fund link the specific SIP with the bank and automates the SIP debit process, as the reference number continues to stay unique for different SIP registrations.
Unit Test Paper Solution August Std 3 to 8
Setting Biller Autopay
Once you register the biller, the bank will share the details with the concerned biller, i.e., mutual fund and validate the same. Further, the biller will submit the periodic SIP amount for payment as per the date specified by you during the SIP registration. However, the bank account, by default, does not pay the bills registered under your billers. Accordingly, the investor must set an autopay mandate in the net banking login, so that the bill is paid automatically when the mutual fund presents it for payment and the investment is made as per the SIP so registered.
Now that you know how to start SIP take a step ahead in executing the above procedure to register a SIP right away and move a step close towards accomplishing your financial goals.
Unit Test Paper Solution August Std 3 to 8
Click here for pepar Solution
Standard 03rd August Month Unit test Question Paper & Solution 2020
Click here for solution
Standard 04th August Month Unit test Question Paper & Solution 2020
Click here for solution
[Std 05] August Month Unit test Question Paper & Solution 2020