SIPs (Systematic Investment Plan) have always proved their consistency regarding substantial returns even in the fluctuating market conditions.Numbers of investors have deposited their funds in SIPs during the past few years. The statistics when compared, clearly state that in 2014, a total of 1,200 Cr was invested monthly in SIPs, however, today(By end of Nov, 2017) it has somewhat pumped upto 6000 Cr a month. In fact, the average ticket size has also increased gradually from Rs. 1,800 to 3,200 a month.
As SIPs facilitates an investor to fetch more units when prices get low and fewer when prices go high, it ultimately averages the cost included over the period. Thus, investors in the current scenario are concerned whether they should invest when markets reach on peak or not, as it can push up their average cost of purchase. Indoinvesting suggests not to stop SIPs altogether unless you no longer wish to invest.
Few common practices that investor needs to stop:
- Merely looking at your fund returns and conclude that it is under performing.
It is important to analyse the relative performance of the fund with benchmark index & similar category funds. It is quite likely that the market is under performing.
- Trying to judge funds performance in a short period
4-6 months is too short period to draw a conclusion about a fund. Fund performance takes not less than 12-15 months to start showing up. Temporary troughs are common in volatile economic conditions. That should not cause panic in a long-term wealth creating process.
- Comparing funds of different categories
Funds in different categories have different objective & risk factors. Comparing a small-cap fund with a large-cap fund might force you to take a wrong investment decision.
SIPs are not meant for a lifetime, thus, assigning a goal to them is important. At Indoinvesting we believe that a pre-determined goal will let stay focused psychologically and help you create required corpus. Goal-based investing even lets you select the appropriate category of funds and assists in managing the equity-to-debt investment proportion.
So, never lose your nerves on SIPs and continue them whether the market goes high or not. Investing at regular market conditions is definitely the best alternative, although, stopping at high could lower down the final corpus due to fewer SIPs. Tame your investments with the above-mentioned ways and see the magic.
So, are you also still planning to shut down your ongoing SIPs to avoid purchasing at high prices?
Well, the key feature of SIPs itself is to let the investors build up their wealth, month after another, while ignoring the market noise. It lets you create an impressive corpus along with achieving the major goals. So continuing your SIP is definitely what you are supposed to do!