Even though timing the market is not a good thing, wouldn’t it be a good idea to invest in equities via a lump sum amount when the markets are down? I had read somewhere that the difference between a lump sum investment and SIP investments is marginal for a period of 5 to 7 years. Is this true?
-Rajesh
This is true to a certain extent, because the timing effect gets neutralized to a certain degree for a period of 5 to 7 to 10 years. However, it is always difficult to invest and stay invested when the markets are on a downward trend, especially when the markets fall further after you’ve made a lump sum investment. This is why we suggest that investors opt for the SIP route, because it helps them manage their anxiety. But if you have the ability to time the markets correctly at all times and always invest at cheaper valuations, then you will stand to gain more.
This article was originally published on April 25, 2012.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
