4 SIP facts new and intermediate investors should know about

Introduction

With SIP collection soaring to Rs 1.66 lakh crore in the first 11 months of 2023, it's a great time to deepen our understanding of SIPs

1. Start SIPs Now

SIPs use rupee cost averaging to your advantage, buying more when prices are low and less when high. So, start now, irrespective of how high or low markets are

2. Don’t Stop SIPs at Market Highs

Example of 2 investors in HDFC Flexi Cap Fund shows that such a strategy can lead to slightly higher returns but significantly smaller corpus (see above table)

3. Be patient with your SIPs

Time is your biggest ally. Starting a Rs 10,000 monthly SIP at ages 25, 30, or 35 shows dramatically different outcomes at 60. So, be patient.

4. Withdrawal Timing Matters

The timing of your withdrawal can impact your returns significantly. It can all go wrong if you plan to withdraw when markets crash.

How to ensure your hard-earned investment is not wrecked at the last minute?

A) Proper asset allocation B) Systematic withdrawal plan (SWP)

Thanks for Reading!