Every time the equity market is weak (or is usually said to be weak), there are doubts about SIP. Actually, the number of SIP investors has increased faster than before, but the number of people raising doubts about this has also gone up much earlier. I hope that over time most mutual fund investors will understand this. But its easy to understand, so many misconceptions exist.
During the research, we found that many investors are not comfortable with SIP and ask many questions. During this time it was also learned that some misconceptions were made about SIP and they were misused.
One such assumption is that many times it is expected that the market will go higher than the actual situation due to such and such reasons, after which it will almost fall. In such a situation, it is advisable to put the SIP on hold. Would it be okay to hold a SIP at such a time? People pay attention to what they have heard for investment or make up their mind by watching TV channels. Such investors start or stop the SIP by looking at the market. I remember in 2010 when equity-based investment was recovering from a major market crash. Investors believe that the investment in SIP was not good at that time. In subsequent years losses were incurred. This was not the whole truth. What actually happened was that investors had stopped investing in SIPs since 2008. But after the recovery in 2009, the investment was resumed. In this way, his routine was to be harmed. This phenomenon is repeated when the equity market declines. The general idea behind SIP is that when there is an upswing in an equity investment, it is difficult to gauge whether this trend will continue. Therefore, it is right that one should keep investing steady funds on a regular basis. When the market will fluctuate, then it will be decided that at this time you do not have to invest in large amounts. When you want to withdraw your investment, all units will be priced the same. When the price was low, you bought a large number of units, so you will get more rate on this.
For good returns it is important to keep in mind two things
The SIP investor should keep two goals in mind. One is that you have to keep investing regularly and secondly, even when the market is unstable, investment should not be stopped. It is important to keep both these things in mind for a good day.
A fundamental problem with SIP investors is that they often become overly cautious when they see falling markets. During this time they do not invest. There is no mistake in this, as he is advised in the same manner in every media on behalf of sector advisors to avoid investing when there is a downward trend. There are examples all over the world, which can be said that such thinking is wrong. One of the basic mantra of investing in SIP is – irrespective of the market trend, you should continue steady and steady investment.
(The author is Dhirendra Kumar, CEO of Value Research, the views expressed in the article are his personal)
Investment should continue even if the market is weak
These are some of the things on which SIP works. An investor should have refrained from manipulating it. To keep SIP profitable, it is necessary that investment should continue even if the market is weak. In a way, investing in a SIP without thinking what will happen next in a weak market is a psychological art. The most important thing for saving in SIP is that investment should not be stopped.
Buy more units at the lowest price
Most investors invest keeping in mind the advice given by the media. Therefore investment is stopped at the time of equity decline. But this idea is beyond comprehension. Any buyer would like the price of the item to be at a minimum. The same thing has to be kept in mind in mutual funds or any other equity investment.