“SIPs  DURING SINKING MARKET AND WAY TO DEAL WITH IT” – PAUSE, REDEEM OR CONTINUE IN VOLATILE MARKET?

Before analysing the words “ SIP, MUTUAL FUNDS, MARKET and Volatility” and its impact on your wealth , lets first try answering few questions:

1.     What was your purpose of making the sip?

2.     Was it to time the market ?

3.     Was it to make short term strategic decisions?

4.     Or was it to save and accumulate wealth over the period of time?

If the reason for making the SIP is to build a wealth for your desired goal for you and your family, then you have every reason to cherish since the cost of purchase per unit is lower now and with every investment in SIP you are getting more units and thereby leveraging the effect of sinking market to your advantage.

Should I continue my running sips?

Remaining invested in a good selected fund over the long period of time and continuing with your SIPs and taking the advantage of lower cost per units is always favourable and advisable rather than “stopping or withdrawing the SIPs in the fear of volatility.

 Analysis of past market crash history:

·        Crash of 1992 ( largest fall in the history due to Harshad Mehta scam

·        Crash in 2000 due to dotcom bubble and south east asian crisis

·        Crash of 2006 & 2007

·        Crash of 2008 ( BSE fell by 1408 points, leading to one of the largest erosion of investors weath) banking industries led recession.

History suggests that market stages a smart recovery after every deep sink. And after the global crisis of 2008, the equity market has raised and shown a multifarious growth. And the long term investors have gained the most out of it.

SIPs work best when the markets are volatile. If you stop SIPs when the markets are down, you miss out on lowering your total investment cost. And if you increase your SIP amounts when the markets are on the rise, you keep averaging your overall cost upwards

        Conclusion:

Do remember “Discipline is the bridge between goal and accomplishment”.

So rule your mind and follow discipline in investment as SIPs are all about discipline”

ARTICLE BY

         CA. JATIN RATHOR

        (MOB 9595121481)

        (E-MAIL: cajatinrathor@gmail.com)

Please note :

1.     The above article is mere expression of opinion of the writer and does not in any way bind the writer in any mode or manner whatsoever.

2.      For any queries you can post a mail to the writer in the above mentioned email id.