Simple Strategy To Beat Mutual Fund SIP Returns

The term SIP(Systematic Investment Plan)has became popular due to the investor awareness campaigns conducted by AMFI(Association of Mutual Funds of India)and AMC’s(Asset Management Companies- Nothing but Mutual Fund Company). Though this term SIP is relevant in volatile conditions, there’s a simple strategy to beat normal sip returns! For that you should have-

  • Time to watch market conditions
  • Courage to invest more when the market tanks(market turns volatile)

Do remember SIP works best in volatile conditions. Generally investors invests more in sips when the market is at peak levels and redeem them in a hurry when the market enters bear territory. Due to this reason many investors are not benefiting from sips.

As most of the sips are monthly sip’s you would not make best use of the market correction. Even though no one can predict market movements, if you have courage to invest more whenever the market slips, you would have earn better returns than normal sip. Even though it seems like “Market Timing” do remember Real Wealth will be created in bear markets.

If you hold sip on 15th of every month, if the market is in full josh(bull market)in most of the cases, you would earn lower returns. To avoid this –

  • You should have courage to invest more when the market slips
  • As there is a saying- “Don’t put all your eggs in one basket”, You should diversify your mutual fund portfolio and develop the ability to analyse which of your holding funds would perform when the market bounce-back
  • Don’t invest all your money in one-go when the market tumbles. Invest in tranches(small, small amounts)whenever the market enters bear territory. This habit is also like a SIP but not in fixed intervals(specific dates)but in irregular periods(when the market turns volatile)

We are not saying to stop your sips, instead continue them as it develops savings habit and disciplined approach to you(investors). We are saying to commit small, small amounts in addition to your existing sips when ever the market slips.

It may not be possible to invest additionally in olden days due to heavy paper-work and cheque-collection processes. But today the world is transformed into digital era all are digital today; you may invest additionally either through amc’s official websites(Mutual Fund House Official Sites)or any of the online partner apps(ETMoney, Scripbox, Kuvera, Phonepe)or with Registrar and Transfer agents(My Cams, Kfintech)of the fund houses.

You can avail any of the above services and invest additionally when there is a blood-bath in the market. This is nothing but investing small amounts additionally but not on a specific date(Normal SIP)If you follow this strategy you would get more units in the market fall than the normal sips which results in better returns than your specific date SIP.

Still not convinced on how is it possible? It’s a simple logic! Your returns would be calculated by multiplying your units* NAV(Net Asset Value). By investing additionally, you would earn more units which gives you better returns when the market turns into bull phase. Do remember bull phase and bear territory are followed by one another. If you have patience to hold for long term, you would never loose money through mutual fund route. That’s why- Mutual Fund Sahi Hai!

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