Investing a sum regularly helps average out the investment over the long-term…
09-Mar-2011 •Research Desk
If the amount invested every month is not same or is not invested exactly on the same date, then does it have the advantage of SIP? When redeeming such investments; the long term capital gain considers the period of one year for the complete amount from the date of first investment or each individual SIP?
- SK Anaokar
Investing through SIPs is a disciplined approach to regular investing. You should base the frequency of your SIP contributions on your convenience and cash flows. For instance, there is nothing to prove that a daily SIP is better than a monthly or otherwise. Irregular sums of investments, invested regularly still manages to average out the investment over the long-term and over a 5- or 10-year investment cycle will not have a marked difference in returns. Focus on investing in good, established funds that have a performance track record over the long-term, and don't get carried away by the market euphoria or any tall claims. When redeeming SIP investments, the holding period of units is taken into consideration for long-term capital gains calculation.
