1. Equity funds SIPs should never be stopped in a falling market as the process of SIP is based on the concept of cost averaging, where an investor would buy more when prices are low and buy less when prices are higher, which in effect, averages out the cost of buying over a long period of time.
2. It also neutralizes the volatility factor in prices to a great extent, since the same quantity is bought over several months at different prices.
3. So, naturally if you stop your SIPs when the market is falling, you forego the chance to accumulate more MF units when their
NAVs are falling.
4. Continuing your SIP in a weakening market could even turn out to be a blessing in disguise in the long run.
5. While SIPs are not a guarantee, either against loss or for higher returns, they stand a better chance of getting average returns in the long term.
6. When markets are in a downtrend, a lump sum investment made at the beginning of the period will lose more than SIPs.
7. The real benefit of SIP investment is when it is continued over a long period of time and across market cycles.
8. SIPs are also useful because they match the cash flow of small investors, especially if salaried.
9. The problem arises when the investor stops SIPs in a market downturn, thereby losing the advantages of buying units at low NAVs and cost-averaging benefits.
10. It is, therefore, wise not to get carried away with market fluctuations in a few years, and stick to SIP investments, as equity fund investing is a longer term game.
2. It also neutralizes the volatility factor in prices to a great extent, since the same quantity is bought over several months at different prices.
3. So, naturally if you stop your SIPs when the market is falling, you forego the chance to accumulate more MF units when their
NAVs are falling.
4. Continuing your SIP in a weakening market could even turn out to be a blessing in disguise in the long run.
5. While SIPs are not a guarantee, either against loss or for higher returns, they stand a better chance of getting average returns in the long term.
6. When markets are in a downtrend, a lump sum investment made at the beginning of the period will lose more than SIPs.
7. The real benefit of SIP investment is when it is continued over a long period of time and across market cycles.
8. SIPs are also useful because they match the cash flow of small investors, especially if salaried.
9. The problem arises when the investor stops SIPs in a market downturn, thereby losing the advantages of buying units at low NAVs and cost-averaging benefits.
10. It is, therefore, wise not to get carried away with market fluctuations in a few years, and stick to SIP investments, as equity fund investing is a longer term game.