How I Made a 25% Profit from SSIS Without any Dividend?

Article By: Sunil Ziz

Financial freedom is the desire of everyone, but very few can achieve it. In the journey of financial freedom, ‘SIPs’ might play a role in the long run. This article will go through what SIP is and why it can be a step toward financial freedom. The acronym of SIP is Systematic Investment Plan, which is an open mutual fund. According to the Association of Mutual Funds in India, a mutual fund is a pool of money managed by a professional fund manager. These entities make a pool of money by collecting money from investors. There are two types of mutual funds: close-ended mutual funds and open-ended mutual funds. As in the name, close-ended mutual funds will be closed in certain periods of time, whilst open-ended mutual funds do not come with any maturity date. However, a beneficiary chooses the plan and ends the open-ended mutual fund at the desired time. This open-ended mutual fund can be said as SIP. SIP does not get listed on the stock exchange, unlike close-ended mutual funds which can be traded as any listed stock.

For SIP, one has to keep paying the installment as per a feasible plan, like monthly, quarterly, or yearly. The paying amount will be as in the Net Asset Value (NAV) of the previous day and can only be traded through the fund manager. In the context of Nepal, the bank’s capital plays the mediator role for buying and selling, managing the SIP. SIP is the horse of the long run and shows the power of compounding. It’s hard to provide a dividend for SIP in any bear phase; however, without any dividend, I am able to make a profit of 25% without any dividend. Let’s take a look at my 18-month journey of SIP.

Siddhartha Capital was my random choice to start SIP with the name SSIS (Siddhartha Systematic Investment Scheme). SSIS closed its IPO on 20 Ashad 2078. One does not have to rely on an IPO for an open mutual fund as it can be started, amended, or closed freely with the help of a fund manager. I opened the SSIS mutual fund in 2022/02/02 when its NAV was Rs 8.52 and I promised to pay Rs 1500 per month. For the first two months, I had to pay Rs 25 Depository Participant (DP) fee which was later amended to Rs 5 as per the new policy. The below table shows my investment.

This was my first year of investment in SSIS. I decided to increase my investment by Rs 500 so that I can have a better profit in the future. Increasing the investment amount in SIP on the basis of some specific period is called step-up SIP. In my scenario, I increased the investment by Rs 500 which is 33.33% of my initial investment. It is suggested that a step-up SIP should be done with a 10% increase on an annual basis. Now, let’s look at my journey over the next 6 months.

The total amount I have invested, for the first year, is Rs 1500 * 12 = Rs 18000
Latter year Rs 2000 * 6 = Rs 12000

Total bought Units = 3419.45
Average NAV = Total of NAV/Total Installment

= 156.98/18
= Rs 8.7211

As of 2024/07/30, SSIS NAV is Rs 11 and has not provided or announced any dividend. If we look at these numbers, then we can conclude that I am in a profit of (11-8.7211) Rs 2.2789 per kitta. This means I am in a profit of (Rs 2.2789*3419.45) Rs 7792.5846. In terms of percentage,

Profit percentage = (Profit/Investment) * 100%
= (7792/30000) * 100%
=7792/300
= 25.97%

I bought 327 and 171 extra kitta at the NAV of 8.33 and 8.38 on 2022/02/27 and 2022/06/07. These units gave me an extra profit of Rs 1291.6118. Hence, the total profit (7792.5846+1291.6118) is Rs 9048.1864. The total amount in the portfolio is attached below, Rs 43087. In conclusion, the bear phase of the market is the best time to invest in SIP without looking for any dividends. Also, we can increase our profit by buying extra units at the time of the bear market.