Lakhs of investors have turned to systematic investment plans (SIPs) of mutual funds in recent months. SIP inflows have increased rapidly—investors pump in close to Rs 4,500 crore every month through this option, compared to just Rs 1,200 crore a month in early 2014. The average ticket size of a SIP has also jumped from Rs 1,800 to Rs 3,200 per month today.
At the same time, some investors are feeling concerned about investing more at a time when markets are close to all-time high levels. SIPs help the investor average his cost over a period of time, fetching more units when prices are low and fewer units when prices are high. In the current scenario, the SIP investor will accumulate units at higher prices, which will push up his average cost of purchase. Therefore, some investors want to sit out and wait for the markets to correct. Should you also stop your ongoing SIPs to avoid buying at high prices?
No, say investors with long-term experience in the market. Over the years, these individuals have learned to ignore the market noise and continue their SIPs month after month. This unwavering discipline has helped them build an impressive corpus, letting them achieve key goals in life or putting them within touching distance of the same.We discussed critical aspects of how to make SIPs work for you.
Returns depend on how investors treat SIPs
Regular investors earned more than those who lost their nerve or tried to time the market.
Regular investors earned more than those who lost their nerve or tried to time the market.
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