SEP (Systematic Equity Plan) or SIP (Systematic Investment Plan)

Small bit of savings create the big corpus for future. It has been observed that stocks with good fundamentals are considered one of the best stocks prevailing. Selection of stock is an integral part while investing in Equities.

The performance in such equity stocks has proved to give phenomenal returns among all the other asset class, only when invested with discipline & for long term.

SEP (Systematic Equity Plan) or SIP (Systematic Investment Plan):

Simple and disciplined approach towards investment

Allows investing a small sum of money regularly to accumulate wealth

Adopts Rupee Cost Averaging

Basis of Investment could be Amount or Quantity

Interval could be Daily/ Weekly/ Fortnightly/ Montly basis

Benefits:

Reduces Risk with Rupee Cost Averaging

Investments made with small sum of money

No need to time the market

Helps in planning long term financial goal

Inculcate disciplined approach towards Investment

Illustration :

Let us say you found XYZ Ltd a good fundamentals stock and bought 1,000 shares for 50 a share. A week later, prices are down to 40 and you are looking at a loss of 10,000. Now you wish you had waited and bought at 40. But what if it goes down to 35?

Let us look at an alternative strategy. What if you had invested a fixed sum of 10,000 every week? In the first week, you would buy 200 shares at 50. With the price down to 40 the next week, you could buy 250 shares. Refer to the table below

Month	Share price	Amount invested	Shares bought
1	50	10,000	200
2	40	10,000	250
3	35	10,000	286
4	30	10,000	333
5	50	10,000	200
Total		50,000	1269

Average Purchase Price : 39

Current Market Price : 50

Profit on Investment* : 13,959

Profit on investment(%) : 28%

Profit on Investment: (50-39)*1269= 13,959

Some stocks are great for the SEP mode of investing. These are stocks we love to accumulate, in small baby steps. That's because they are Value Picks. They represent long term value. They are like solid assets. They are companies which we know are there for the long haul. Companies that have led, are leading and show promise of remaining market leaders in areas of business that show the promise of a long and prosperous life. SEP is best done in companies which we would love to own, if we could afford to. Such a company is tireless marathoner, has a solid, stable and ethical management; operates in a perpetual sunrise area with a never-say-die attitude. This is a company that stays focused on its line of business and is not an unsteady opportunity hunter.

Company Name	Company Code
ACC	ACC
Bharti Airtel	BHATE
Coal India	COALIN
HDFC Bank	HDFBAN
ITC	ITC
Larsen & Toubro	LARTOU
Maruti Suzuki	MARUTI
Reliance Industries	RELIND
State Bank of India	STABAN
Sun Pharma	SUNPHA
Tata Consultancy Services	TCS