It's said that the best way to beat volatility is through systematic investment plans. How true is it? Do you agree with it?
-Anonymous
We broadly agree with it. It falls in line with the way human beings are structured, the way we conduct our personal finances. We get our salary every month, we buy our car on installment, then why invest in a big sum on one day?
A lot of people misunderstand that SIPs are a guaranteed way to make profits. They are now complaining that they have done SIPs for the past 2 years but they are still facing losses. SIP is not a guaranteed way to profit, it is a superior way to invest. By investing periodically, you are able to average by buying at different levels of the markets. Also, investing gradually helps you manage your anxiety better. It helps you accumulate.
This article was originally published on January 19, 2012.
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