The Signal : FriendSIP through peaks & troughs

For someone who is new to Systematic investment plans or SIPs, they seem to distinct investment in themselves If you ask a new investor where he is investing you may get a response that he is investing into SIPs. SIPs are not investments in themselves but a systematic way of investing in an asset class.

Think of SIPs as a reverse EMI as you invest at select intervals and amounts thus putting your portfolio on autopilot. Serving multiple benefits, SIPs help in averaging when accumulating units, rejigging allocations at regular intervals and ensuring tenure longevity. Hence, SIPs by structure, serve as an anecdote to anxiety.

When put in figures, the story stands true. As can be seen below, SIPs when done at market highs or lows yield lucrative returns:

As can be seen SIPs have generated returns at the cusp of market falls and rises. The ability of SIP to rally through unaccounted market woes solves another big investing issue in “Timing The Market vs Time In The Market”. SIP’s time and market-agnostic calibrated approach helps investors realize the maximum via participation potential over investors waiting for the “right time”. As the saying goes, “Those waiting for the right time, end up waiting forever.” Rather, start SIPs today and make the time right.

Continuing on time, it is pertinent to start to SIPs at the earliest possible time to max out on returns. Returns realized and time invested are-more-often-than-not directly correlated. The graph below highlights the potential of SIPs in the long-run and shows why “Time in the Market” beats “Timing The Markets”

In any markets SIPs have shown how every trough is followed by a pointed peak. SIPs show markets offer returns at all points to those willing to be systematic and not scared. It makes all hunting turn into bargain hunting.

Even if your SIP amount is less than what is required do not be saddened just keep investing and increasing your SIPs on a annual basis. If you increase your SIPs every year in line with your annual appraisals, this will not only help you achieve your goals faster but help bridge the shortfall.

We at Fisdom plan to keep writing on SIP for as long as SIP stays exciting, and oh yea, SIPs will always be exciting and more.

Having shared our views, we look forward to hearing your fun and funny SIP stories.

Till then, Happy Weekend