Published: 01st Aug 2024
By: Value Research
Markets go up, markets go down. So, there’s no point waiting for the ‘right’ time to start your SIPs. In fact, SIPs help you navigate the highs and lows of markets better, thanks to rupee cost averaging.
Rupee cost averaging implies that your SIPs buy more units of a mutual fund you are invested in when the market is down and fewer units when the market is up.
Although stopping your SIPs when the markets are going up may yield marginally higher returns right now, you will end up with a smaller corpus in the long run. Thus, it’s best to stay invested for the long term, irrespective of the market conditions.
The longer you invest for, the larger the corpus you will be able to accumulate, thanks to the power of compounding.
Note: Returns have been assumed at 12 per cent p.a.
When you withdraw your money can significantly impact your wealth. Assuming you stopped your SIPs when the markets crashed, your corpus would be much lower. By contrast, liquidating your investments during a bull run would result in a larger corpus.
Note: Assuming an SIP of Rs 10,000 per month in HDFC Flexi Cap Fund (Regular) with a duration of 10 years