SIPs Explained: Is It the Right Investment for You?

The S&P BSE SENSEX has risen by 5,500 points in the last six-and-a-half months. The Sensex and Nifty, India’s benchmark indices have risen by 20% since the beginning of the year which is the highest in the world. So if Indian markets are galloping then what should you, as an investor, do?

The answer is that you should ignore market levels and remain invested till the time your financial goals are  achieved. Let the market attain a new high every day, doesn’t matter!

Why are Markets growing?

India’s macroeconomic indicators are supporting markets high growth. Like, GDP is growing at 7.1% for FY 2016-17, inflation is falling, a fiscal deficit is in check. Indian economy is the fastest economy in the world with 7% + GDP growth rate. Last Financial Year ( 2016-17) , the government has achieved the fiscal deficits target of 3.5% , For 2017-18, the government aims to further bring down at 3.2%. Retail inflation has fallen to 1.54% in June 2017.The implementation of GST will add value to reforms process and likely to grow (GDP). Indeed, Indian economy and markets have no reason to worry in the near term at least.

Investors across the globe are confident on India’s growth movement and it is reflecting in the stock markets index growth. Though markets are attaining new highs many times in the recent past and moving to record high levels, no one can predict the next move of the markets. It may attain a new high or may enter into correction mode (it may fall).

As a long term investor, you should neither worry about day to day market levels nor feel euphonic at an all-time high index. The important point should be – to remain invested in the markets till the time your financial goal is not reached.

Knowledge and confidence

As an investor, you must have knowledge and confidence. The basic knowledge of the functioning of the markets, information about investment opportunities, asset allocation will give you confidence to stay calm in volatile markets. You can visit Quantum Direct section on our website where you can read all our articles, notes on markets and investments which will keep you up-to-date with current market trends and investment opportunities in mutual funds.

Ignore Market Noise, Continue with SIP

SIP (Systematic Investment Plan) is a long term investment option and returns are adjustable with long term market movement. It is not advisable for investors who have short term financial goals. You need to remain invested in SIP for a reasonably long term say, 3 years and above.

The biggest advantage of SIP is that you can start it at any time with whatever amount you choose. Once you start with a SIP, then you should not worry about market levels (high, low). You should continue with your SIP till the time your financial goals are not achieved. You can review the performance of a SIP once in six months or any time when markets are attaining all-time high or low level. However, discontinuing SIPs in between is not an advisable option at all.

The yardstick for SIP must be your financial goal – if achieved, then obviously SIP becomes successful otherwise you need to remain invested till the time you have not attained your financial goals, despite market levels.

Remember - SIP should link with your financial goals and the performance of SIP should not be judged on the basis of day to day market levels. Market levels will keep changing but your financial goals are fixed. Let your SIP achieve it. You need patience and confidence till the time your SIP is not successful. The volatility in the markets may extend the period of celebration but ultimately long term investment in markets via SIP has the potential to deliver healthy returns. Remember mutual funds sahi hai, but SIP is one of the sahi tareeka for investing in mutual funds.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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