To pause or not to pause your SIP?

Meet Anika, a young investor navigating the turbulent waters of equity investing. Two years into her SIP (systematic investment plan) journey, she's facing a common dilemma - should she pause her investments as the markets soar to new heights? Like many of her peers, Anika's social media feed is flooded with market updates, each fresh market high triggering an anticipation of a market fall. But here's a surprising fact that will calm her nerves. In the last four and half decades, the Sensex has hit all-time highs on 734 days (as of July 29, 2024). That's right, climbing new summits is more common than you might think. So, before Anika considers hitting the panic button, let's explore why sticking to the full SIP course might be her best bet to build wealth. Arithmetic behind SIPs Picture Anika as a savvy bargain hunter in the equity mall. Each month, she strolls in with Rs 10,000, ready to seize investment deals. On some days, the market is in a frenzy, and she might only afford five units at Rs 2,000 each. Other times, the market is on sale, allowing her to buy 10 units at Rs 1,000 each. This shopping strategy, known as rupee cost averaging, helps Anika buy more when there's a sale an

This article was originally published on August 15, 2024.