SIP- The Magic Wand You Need to Fulfil the Wish of a Special Someone

By Jitender Sharma - February 05, 2018

There is no greater feeling than making your loved one’s dream come true. But unfortunately, most materialistic dreams have a price tag!Much as you want to see the glint of happiness in the eyes of your loved one, you feel helpless on the face of your meagre salary.

But a lot of people resort to a credit card in making dreams come true. However, before you whip out the plastic, give it a second thought. The high-interest rate on credit cards can reduce your dream purchase into a nightmare.

EMI vs SIP

What if we were to tell you that you can turn it the other way round? Better still, you can earn money on your investment and make that coveted purchase? Here is how.

Instead of making the purchase on your credit card upfront and turning into an EMI later, where you will end up paying a higher amount to your bank, you can consider investing in a mutual fund scheme through the systematic investment plan or SIP route.

Here is an example for you to understand the concept better.

Suppose you want to buy an expensive television or a jewellery set worth Rs 1 lakh for your spouse and you don’t have that much money at the moment. Here are two ways you can finance your partner’s happiness:

Option 1

You opt to take a personal loan or buy it via a credit card for a tenure of 12 months. The assumed rate of interest you’d need to pay is roughly 9.5% per annum. The EMI, in this case, amounts to Rs 8,768 every month and the total amount you end up paying would beRs 1,05,216.

Option 2

You invest in a mutual fund throughSIP to arrive at a corpus of Rs 1 lakh. Assuming that the expected rate of interest is 12% per annum, the monthly SIP amount you decide is Rs 8,500. A calculation made with an online SIP calculator shows that your total investment at the end of a year would stand at Rs 1,08,879.29. This means that you’d have over Rs 8,800 after you make the dream purchase.

SIP advantage for short-term goals

As is visible in the example stated above, you clearly stand to gain by investing through SIP. The only disadvantage, if you can at all call it that, is that unlike a purchase with a credit card or a personal loan, there is no instant gratification in a short term investment through the SIP route.

But if you were to weigh the pros and cons closely, you will find that it is better to be patient. Besides, too much of debt can do serious damage to your credit profile and prevent you from taking a loan when you may be in dire need of one.


Therefore, it is always advisable to opt for the investment planning route. This will not only bring about unbridled joy for your loved one but will keep you stress-free as well! So, why wait? Invest in a Franklin Templeton mutual fund.

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