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Systematic Investment Plans (SIP)
Don’t let your money sit idle. Inflation continues to erode your purchasing power, which is why it is essential for you to take advantage of opportunities that let your money work harder for you.
What is a Systematic Investment plan?
A SIP is simply a disciplined way of saving whereby you invest a fixed amount of money periodically and take advantage of market movements over a medium- long term period. Instead of investing a lump sum into mutual funds at once, with a SIP, the total investment amount is split over a set period and the smaller amounts are put aside and the investment is made at regular intervals over a longer period, for example over 12 to 36 months.
We are proud to have partnered with international third party fund houses, and to have developed our own in-house funds. ADCB offers a complete range of quality GCC and international funds that have been specifically chosen based on stringent selection criteria.
Benefits of a SIP:
Did you know that one of the first rules of investing is BUY LOW, SELL HIGH? However, emotional factors like fear and greed often cloud our investment decisions, especially when deciding whether to stay in or out of the financial markets, which is why a SIP is so convenient.
- Disciplined Investment Solution – a SIP allows you to participate in the financial markets without trying to guess its movements and it takes away the sentimental aspect as there is no need to worry about the timing of your entry into financial markets. The risk of investing in volatile markets can also be reduced.
- Dollar Cost Averaging Solution – by investing the same amount on a regular basis you will be able to take advantage of movements in the market by averaging your total cost of purchase. When the shares have a lower price, you get more for your money and this will be beneficial as when the share price is higher, fewer units will be purchased.
- Affordable and Controllable Solution – a SIP assists you to cultivate a regular savings habit that you choose as an affordable fixed amount. For as low as USD 500 per month, you can invest in a multi-asset fund, or construct a personalised portfolio.
- Convenience and peace of mind – the monthly investment sum is automatically deducted from your current or savings account so no need to worry about due dates or missing payments.
The following graph gives you an idea of how a SIP works and the how the Dollar Cost Averaging benefits you by lowering your investment cost and at the same time you have more units in your investment portfolio.
Source : Bloomberg and ADCB
Over a period of 36 months with USD 100 contribution per month, the cumulative investment value at the end of 36 months is USD4,964.25 for a SIP versus investment value of USD3,724.41 for lump sum investment. In term of IRR in which case, the SIP yields 22% p.a. against the lump sum of 1.14% p.a.
(Note : Yields are in term of IRR and is purely illustrative and applies only to this specific time period.)
To take advantage of our Systematic Investment Plans please contact 800 2030 or sms SIP to 2626.
ADCB does not guarantee any providers, and investors invest at their own risk and bear all risks involved in any product purchased.Investment products are not bank deposits and are not guaranteed by ADCB, they are subject to investment risks, including possible loss of principal amount invested. Past performance does not guarantee future results. Please refer to ADCB Terms and Conditions for Investment Services.