Five SIP facts you may not be aware of

This story is fitting for a new as well as an intermediate SIP investor. And with SIPs to the tune of Rs 14,000 crore being pumped into the market, we thought the timing was right to know more about SIPs too. So, let's get started. 1. The best time to start SIP is now If you have heard this before, skip to Point two. But those who haven't or are currently in the start-now or start-later confusion, here's why you should not delay your SIP further: the markets are in constant flux; something or the other keeps happening. If you keep procrastinating, nothing good will come out of it. On the other hand, SIPs, by design, are meant to help you navigate the ups and downs of the market, thanks to rupee cost averaging. Rupee cost averaging? Here, your SIPs buy more stocks when they are available at a lower price and buy less when stock prices become expensive. That's what all investors want, right? Aprajita Anushree Sure, you will go through a rollercoaster of emotions, as seen in the table above, but you will come out the other side better than you were before, as seen in the above Sensex chart. Hence, start your journey now. 2. Never pause or stop your SIPs at a market high Stopping or pausing your SIPs should be for valid reasons and not because you wish to be clever with your money. Let's assume both Mr A and Mr B have been investing in HDFC Flexi Cap Fund with a monthly SIP of ₹10,000 for the last 15 years. Mr A keeps investing irrespective of how the market is performing, whereas Mr B pauses his SIPs for three months whenever the Sensex hits an all-time high. Care to guess who is cleverer? Let's find out. Too clever for your own good? Pausing SIPs at market high may yield marginally higher returns, but at the expense of a smaller corpus Monthly SIP: Rs 10,000 for last 15 years Mr A never stops SIP Mr B pauses SIP for three months during Sensex highs Mr A Mr B Investment amount  Rs 18 lakh Rs 13.5 l

This article was originally published on August 24, 2023.