Here's how SIP can help you benefit from volatile markets
SIP has been gaining popularity among Indian MF investors, as it helps in rupee cost averaging and investing in a disciplined manner without worrying about market volatility and timing the market.
Recent market volatility may worry investors, but experts reassure that staying committed to systematic investment plans (SIPs) can yield long-term benefits.
In February 2024, SIP inflows surged past the ₹19,000 crore mark, marking a significant milestone. To shed light on navigating these market fluctuations, CNBC-TV18 engaged in discussions with Feroze Azeez, Deputy CEO of Anand Rathi Wealth Limited, and Nirav R Karkera, Head of Research at Fisdom.
Azeez emphasised on the importance of consistency in SIPs over the long haul, suggesting that they should ideally continue indefinitely to align with the regularity of investments, savings, and incomes.
"I don't think this market fall should perturb you at all," Azeez said and highlighted the advantageous nature of market downturns for SIP investors due to the concept of rupee cost averaging.
The rupee cost-averaging feature of SIP allows investors to buy more units of a mutual fund when the market is low and reduce the per-unit investment cost.
He explained, "Falls are actually good because the future cash flows are going to be buying units for cheaper."
Moreover, Azeez pointed out the regularity of market corrections, noting that the Nifty has experienced a 10% decline approximately once every quarter over the past three years.
He advises investors not to be swayed by short-term market movements and urging them to stay focused on their long-term investment strategy.
Echoing similar sentiments, Karkera stressed on the fundamental principle of buying low and selling high to maximize profits in the market.
He added that market corrections are opportune moments for increasing investments, as lower prices enable investors to accumulate more units of their preferred assets.
Karkera recommended seizing these opportunities by increasing SIP contributions during market downturns.
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(Edited by : Anshul)
First Published: Mar 19, 2024 5:45 PM IST
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