Widely read:
Would you suggest decreasing the SIP amount in an overvalued market and increasing it in an undervalued market?
- Ramesh D Patel
No, it amounts to timing the market, and nobody can do it perfectly. This strategy will not work. If you have been investing Rs 10,000 a month in an SIP for the last ten years, you would have the principal contribution of about Rs 12 lakh. And this may be worth about Rs 30-40 lakh. That is the kind of potential growth that would have happened in the last 10 years. It is possible in an equity fund. If you try timing it perfectly, thinking something significant will happen, and if the market drops by 10 per cent and you stop your SIP, your 50 lakh rupees will come down by 10 per cent. It will take a Rs 5 lakh hit. So, don't practice this.
I think the whole joy of SIP is to have discipline, and it turns out to be right most of the time. Follow and be guided by your needs, and be a little more conservative. Take out the money you need in the next two to three years. Changing methods according to the market won't work, but it can distract you. The other disadvantage is if you turn out to be right, you think there's some magic, but the magic will happen only when your money remains invested and the market does well.
This article was originally published on February 11, 2022.
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.
