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Should you continue investing in SIPs when equity markets are choppy?

By Finserv MARKETS - Aug 27,2019
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Should you continue investing in SIPs when equity markets are choppy?

Equity markets are known for being volatile, and face fluctuations constantly owing to a wide variety of reasons including economic and political stability both regionally and globally. Systematic investment plans (SIPs) are gaining in popularity over recent years, as people look to diversify their investment portfolio and build up funds for their short and long-term goals.

With SIP mutual funds, investors can arrange to invest regularly by automating deductions from their savings accounts on a pre-decided date and towards a particular fund. Investors can also choose to increase the amount of investment as and when they wish to. SIP mutual funds are the best investment plans because they aid you in systematically building up your corpus over a period of time. Mutual funds allow you to invest across a bouquet of funds that could include equities, debt and other securities. A healthy balance of all of these funds ensure that mutual funds can provide investors with the highest returns while also ensuring minimum risks.

SIP mutual funds should be invested into while keeping in mind a time period of at least 5 to 10 years, since the performance of the fund can only be judged over a substantial period of time. Fluctuations in the equity market do not affect SIP mutual funds over the long term, since the fluctuations allows for a lot of benefits. Volatility in the equity funds allow for market corrections, and this gives investors the chance to pick up a lot of high value shares for a lower net asset value (NAV). NAV represents a fund’s per share market value, and is the price at which investors buy shares and then sell them as well.

Buying shares of a fund that usually performs well allows investors to benefit over the long term. Thus, market corrections and fluctuations in the equity market have the potential to help your SIP mutual fund display good performance over the long term. SIP mutual funds are considered the best investment plans because they guarantee high returns while also assuring security of the funds invested.

If you invest in mutual funds through Finserv MARKETS, you can also forego commission fees by opting for a Direct Investment Plan which allows you to monitor your fund, its performance and results by yourself. Once you open an account on the platform, you also get access to detailed information on different portfolios, which provides you with adequate information to allow for competent decision-making.

Read on to learn about how SIP mutual funds are helping investors build up their corpus, and outperform the market results.

  1. You can begin with small investment amounts:
    A SIP mutual fund can be started for small investment amounts. Many SIP mutual funds are started by young professionals or even students, and they can invest as little as Rs. 500 to begin the fund. As income grows, the investment amount can be increased at your own discretion. The corpus you accumulate over a period of time will be reflective of the amount you invest, and thus you can decide your own investment amount based on your own requirements and the goals you set.
  2. Regular investment period:
    With a SIP, you can ensure that you invest on a regular basis. You can decide in advance whether you want to invest monthly, quarterly or the frequency of investment according to your own convenience. You can automate the fund to deduct the amount direct from your savings account, and thereby ensure that you don’t have to manually invest each time. This will allow for your corpus to be built up even without your active intervention.
  3. Lesser risks:
    Since SIP mutual funds are an investment instrument that are supposed to be invested in for a long period of time to ensure maximum returns, they assure investors face lesser risk than other investment instruments. The risks of investing in a SIP mutual fund are lower even if the equity markets are choppy, because the risks get diluted over the longer tenure when the markets are doing well. If you invest in mutual funds on Finserv MARKETS, you can choose to appoint fund managers who not only advise you on the best investment course but also actively work towards staying ahead of the market returns curve, which allows you to derive the highest returns.
  4. Power of compounding:
    Compounding of funds is how SIP mutual funds derive the greatest returns. Even if you invest just Rs. 500 0ver a period of five years, you can drive substantial returns until the end of the investment tenure. For achieving certain goals, SIP mutual funds are the best investment plans since the compounding guarantees that you can achieve your goals within the time frame you have decided for it.

Investing in SIP mutual funds are always a good idea, even when equity markets are choppy and cannot be depended upon to generate high returns. SIP mutual funds ensure a regular investment term, and allow you to invest regularly and build a substantial corpus. Investing in mutual funds through Finserv MARKETS gives you access to different investment funds, and you can choose the fund you wish to invest in based on your requirements as well as risk appetite. You can either choose a fund with a portfolio manager or choose to manage it yourself thereby saving yourself significantly in commission fees.

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