Riding Market Volatility Via SIPs
September 20192 min read
The day of September 20th, 2019, started as normal Friday for Indian markets but it ended with a big bang. It was a day when the top indices in India i.e. Nifty 50 and Sensex clocked their biggest gain in a day in the last 10 years. The rally continues on Monday with both indices rising by around 3% each. FM Nirmala Sitharaman gave the much-needed boost to Indian equities. It also helped mutual fund investors to regain confidence in their investments.
The NAV went up almost by 8% in just two days.
But what if you were doing SIPs over last one year, how much would you gain from this rally?
Over this period of volatility, we were telling our investors to continue putting in money via SIPs, to ride volatility in the market. As the popular saying goes “In investing, what is comfortable is rarely profitable.” So continuing the SIPs in the falling market was very uncomfortable for first-time investors.
We can’t change what has happened in the past but we can alter our behavior during volatile periods in the future.
SIP Returns of 1 Year
To give you confidence in the strategy of continuing SIPs across volatile markets and to show you the result of riding volatilities, here is some analysis we did on SIP investments. Over last one year, if you would have continued investing in SIPs, your gain would have been almost double than the gain of the indices. For illustration purpose, we have considered top 3 funds as per AUM in three categories viz. Large Cap, Mid Cap, and Small Cap.
As you know, equity investments are meant for long term. If you take a call on your investments based on its short term performance, it’s time to rethink your strategies.
Change in behavioral impulses can help you to create significant wealth over your investment horizon. Get in touch with your financial advisor if you want to know how you can alter your investment habits. It will, in turn, fulfill all your financial goals.
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