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Should I wait for the market correction to start an SIP of Rs 25,000?

One should not try too hard to predict where the markets would be. Instead, one should follow the investment strategy with discipline, advises Ashutosh Gupta

I just started my career and I want to start investing Rs 25,000 per month. Should I wait for the market correction or should I just start with my SIPs?
- Rachit Garg

You should not wait for the market correction and should go right ahead with the SIP investments. Markets by their very nature are unpredictable. And the SIP, as an investment strategy, is precisely meant to set you free from taking a call on the markets.

If you reflect back on the way markets have been behaving over the last one year, then nobody anticipated the velocity with which the markets fell in the month of March and after they had fallen, nobody expected them to recover as swiftly as they had. So, anybody who has tried to pre-empt the market level has gone wrong. And this is not a unique case. Markets have always been like that. So, one should not try too hard to predict where the markets would be. Instead, one should follow the investment strategy with discipline and continue to invest through the ups and downs of the market.

If the markets do correct sharply from hereon, it will only work towards your advantage because you would end up accumulating the units of your mutual fund at a lower level. And if you have a long-term horizon which you presumably have, then you should not worry about the near-term concern of where the markets would be. The only way in which you can do harm to your investments is if you get unnerved when the market falls and stop your SIP abruptly or worse still, if you end up being at a loss and never come back to the market. So, avoid doing that and continue to invest through the market ups and downs.

But if the possibility of market fall worries you too much, then I would suggest that you should go for aggressive hybrid funds which have some allocation to fixed income, which cushions the downside a little bit. So, go with aggressive hybrid funds but continue to invest with discipline.

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