A thread - Does timing your SIPs work?
They work best when you don't try to time and fiddle with them.
Example 1: Stoping SIP and restarting when markets stabilise
Stopped SIP in March
Did this work?
No: 2.93 lk vs 1.93 lk
Missed opportunity - 1 lk (Savings + Returns)
1/6
They work best when you don't try to time and fiddle with them.
Example 1: Stoping SIP and restarting when markets stabilise
Stopped SIP in March
Did this work?
No: 2.93 lk vs 1.93 lk
Missed opportunity - 1 lk (Savings + Returns)
1/6
Example 2: Starting new SIP only after markets stabilise
Postponed SIP investments after March fall.
Did this work?
No: 90 k invested is worth 1.03 lk
Missed opportunity - 1.03 lk (Savings + Returns)
2/6
Postponed SIP investments after March fall.
Did this work?
No: 90 k invested is worth 1.03 lk
Missed opportunity - 1.03 lk (Savings + Returns)
2/6
One would say these examples look good since markets have bounced back sharply.
Correct, in hindsight this looks good. But, if we go back in history, equity markets have always come out of crisis sharply. And SIPs continued during crisis have recovered even faster.
3/6
Correct, in hindsight this looks good. But, if we go back in history, equity markets have always come out of crisis sharply. And SIPs continued during crisis have recovered even faster.
3/6
As long as we are investing for reasonable period of years and practice patience, SIPs haven't disappointed.
Their rupee cost averaging has helped in delivering better returns than market. Most importantly during low return phases.
4/6
Their rupee cost averaging has helped in delivering better returns than market. Most importantly during low return phases.
4/6
Simply put...
SIP isn't a magic wand, you have to take efforts to make it work.
What Efforts?
- Never stop them during falling market, they work best during such periods
- Never try to time SIPs, the effort is worthless. They are designed assuming we can't time the market
5/6
SIP isn't a magic wand, you have to take efforts to make it work.
What Efforts?
- Never stop them during falling market, they work best during such periods
- Never try to time SIPs, the effort is worthless. They are designed assuming we can't time the market
5/6
Had written this piece sometime back in April, worth revisiting it again.
What 25yrs history teaches us about SIPs.
edelweissmf.com/know-us/employ…
6/6
What 25yrs history teaches us about SIPs.
edelweissmf.com/know-us/employ…
6/6
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