Thursday, 25 June 2015

Best Stocks to Invest Through Systematic Equity Plan / Equity Systematic Investment Plan / SEP / ESIP

Posted by RaviKumar Nama
Selection of stocks and the timing to enter into the stock market is a very difficult task to many investors. The so called market experts also fails frequently in estimating the Market. This is the reason many small retail investors making distance from the market and investing in low-yielding investment products. So what are the options available for small retail investors? How to benefit from the Market turbulence? Systematic Equity Plan / Equity Systematic Investment Plan will answer to these question....


What is Systematic Equity Plan / SEP :

The Systematic Equity Plan / Equity Systematic Investment Plan / SEP / ESIP is similar to Mutual fund's SIP. This is an approach to invest into stocks systematically on regular intervals with some quantity or amount basis. Suppose you want to invest into Maruti Suzuki stock through Systematic Equity Plan / SEP approach. You can opt for 5 shares of Maruti Suzuki per every month for 3 years through Systematic Equity Plan / SEP approach. 

Why Systematic Equity Plan / SEP is most recommended:

For long term wealth creation through equity market you need discipline and long term time horizon which are inherent features of SEP. The following features of SEP makes it fit for equity market.

  1. Simple and disciplined approach towards investment 
  2. Can be started with small amount of money to accumulate big corpus 
  3. Reduce risk with Rupee Cost Averaging 
  4. Flexibility in terms of Amount or Quantity based SIP 
  5. Flexible intervals like Daily/ Weekly/ Fortnightly/ Monthly basis
  6. Can align your long term financial goals
  7. Timing the market is not required and can start SEP at any point of time
  8. No worry about Market Turbulence
  9. More aggressive approach and better returns than Mutual fund SIP
  10. Gold can also be included into SEP Portfolio for hedging purpose 

5 Best Recommended Large-Cap Stocks for SEP:

  • Maruti Suzuki
  • HDFC Bank
  • Infosys
  • Larsen & Toubro
  • Bharti Airtel
  • SBI

5 Best Recommended Mid&Small-cap stocks for SEP:

  • Shilpa Medicare
  • Nilkamal
  • Ramco Systems
  • Anuh Pharma
  • Ambika Cotton
  • Transport Corporation of India
  • Nitin Spinners

Tips for Investing through Systematic Equity Plan / SEP:

  1. Hold for Long Term : SEP is specially recommended for those who can hold for more than 5 years. Then only you can get the benefits of Rupee averaging as well as the benefits of Market turbulence.
  2. Revise Every Year: It is highly recommended to revise your stock portfolio under SEP for at least once in a year. Remove non-performers and add well-performers.
  3. Maintain Limited Stocks: You should limit your stocks to 5 - 6 under SEP, otherwise maintaining stocks are very difficult for you.
  4. Make Diversification: Select only 1 stock from each sector and maintain diversification to average your losses. 
  5. Hedge with Gold: You can also add Gold ETFs into your portfolio for hedging purpose

Conclusion:

Small is always beautiful. Investing into stocks through SEP for long term would definitely gives a big corpus at the end. Even new investors or small retail investors can enter into the market through SEP at any point of time and can benefit most from the market.

2 comments:

  1. Very Nice Article ! Good work !!

    ReplyDelete
  2. Hi Ravi,
    GM. Pl suggest in current scenario best stocks for SIP for next five years

    Thanks

    Regards
    Karthik

    ReplyDelete