The ultimate guide to SIP secrets
How effective are SIPs? And how can you make your SIPs truly
work? Here are all the compelling findings from an extensive research study we
conducted on SIPs
Retail investors, globally, have earned a reputation for always
being on the losing side of their investment bets. Instead of buying low and
selling high, they are known to avidly chase a rising asset and develop cold
feet when it is down in the dumps. However, in a welcome trend, the pattern of
inflows into equity mutual funds in the last three years suggests that many
Indian retail investors aren't making these mistakes any longer.
Financial year 2016-17 closed with net inflows of Rs 1.07
lakh crore into the equity-oriented fund categories (equity funds, balanced
funds and ELSS). This topped off Rs 93,767
crore of net inflows in 2015-16 and Rs 80,855
crore in 2014-15. The stock-market behaviour in these three years was quite
varied. 2014-15 saw a strong bull market, with the BSE Sensex soaring by 25 per
cent. 2015-16 saw the markets assailed by doubt, with the Sensex losing 10.5
per cent in value. 2016-17 has been a year of revival, with the Sensex gaining
17 per cent, yet retail investors have kept faith with equity-fund flows
through all three years.
This change in behaviour owes a lot to the growing popularity of
systematic-investment plans (SIPs). SIPs have in fact become a regular habit
for over 1.35 crore Indian investors, who, as per the AMFI data for March 2017
are committing over Rs 4,300 crore to equity funds every month. The data also show the
industry adding about 6.3 lakh new SIP accounts every month. This means that
well over a third of the inflows into equity funds today flood in irrespective
of how markets behave.
While this is a revolution no doubt, the queries received by
Value Research suggest that investors in SIPs and those still sitting on the
fence have several basic doubts about this investment tool. We did not want to
address these questions theoretically, talking about concepts such as rupee
cost averaging, etc. Instead, we decided to draw upon the real experience of
Indian investors with SIPs by conducting an extensive research study that uses
data spanning the last 25 years for Indian equity funds. The findings, which
address common doubts in the minds of investors, will be presented through a
5-part series (given below) over this week.
The
number crunching
Loss-proofing your SIP
Making a double-digit
return
Timing wrong? Stretch
the SIP
SIP the right fund
Happy Investing
Source: ValueResearch.com
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