There is no strange that none of the investors are unaware of the term “SIP”(Systematic Investment Plan) There was a wide awareness on Sip among investors.
Even though Today’s generation are aware of the investing tool- SIP, there is still slightly misconception that SIP was an investment vehicle. When you asked any typical investor about their investments, you may heard that -They are “Investing in SIP’s”! But actually the fact is Sip is an investing method; you are “systematically investing in a product”(whether it might be equity or debt)
Even today many investors are not aware of the concept of “Sip”. They are blindly following the marketing professionals words and started investing through sips. Even though marketing professionals words are followed in the bull run(Market Rise)investors loose patience in Bear Market(Market Downturns)and sell their investments with panic. Investors won’t listen to the experts words in such turbulent times. Actually this is the “Biggest Blunder” you are doing in your wealth creation journey.
Almost all investors like to do sip’s as they are economical and pocket-friendly(easy to invest monthly in small, small tranches)but their enthusiasm would be limited until bear market arrives. Once the market enters bear phase they get panicked and cease their sip’s without any second thought.
But actually The Magic of Sip lies in-
- When you continue your sip’s in bear market– Though it may be strange to hear, the fact is by continuing your sips without worrying on the short-term market volatility, you would end up earn huge corpus once the market enters into bull phase.
- Do Note That Markets are Cyclical– As per stock market history bull and bear phases are not permanent. Instead they are “Cyclical” in nature. What you have to do is remaining invested through sip’s with patience
- If the market corrected heavily, Increase your SIP Amounts– If you are investing nominal amounts through sips, grab the opportunity of the bear market by increasing your sip contributions.
If you have time to watch the market movements, carefully watch the price movements and invests “Bulk” Money(in 3,4 installments in every market dip)
If you don’t have time to do research, it’s time to give a “One-time Mandate”(OTM)to the fund house and your banker to “Top-Up” your sip.
Once you gave One-Time Mandate for SIP Top-Up automatically increased investment value will be debited from your bank a/c(as per the top-up amount selected by you)
Finally SIP’s works best in bear conditions as it will accumulate “More Units” and thus averages your investment cost which turns out be a golden opportunity in bull run(No.of accumulated units*Current NAV in the bull run)As the number of units increases, there are chances to get higher returns when the market turns positive.
So don’t stop your sip’s in bear phase. Instead you should top-up or increase your sip amount to gain from “Rupee Cost Averaging”