Keep It Simple

One of the worst things that the financial services industry does is to regularly take simple and effective idea and then complicate it beyond the point of usefulness. India’s mutual fund industry is currently busy doing this to SIPs. Fund companies have attached a whole host of bells and whistles to SIPs that investors should approach with a great deal of scepticism. SIPs are supposed to be a simple and straightforward idea. You invest a fixed sum regularly in an equity fund, regardless of market conditions. Over a long-term, you end up buying more units when the markets are down and fewer when the markets are up. Your average price of acquisition is inevitably lower than what it would have been had you tried to time the market by trying to predic

This article was originally published on December 12, 2011.