Should You Be Investing in Equity Mutual-Fund SIPs Now?

  • Posted By :
  • Saturday Sep 09, 2017

Key Takeaways

  • Benefits and key features of SIPs
  • Quick out-take on whether now is a good time to enter Equity-linked SIPs

Mutual fund SIPs are a great mid-point between the solidity (and slow returns) of fixed deposits and government investment products, versus the other end of the spectrum, i.e. the volatility and untamed sentiment of investing in stocks and commodities.

Let’s examine the case for investing in Equity Mutual Funds via SIPs, shall we?

  • A well-diversified Mutual Fund portfolio spread across sectors, lets you reap surges when and where they happen, and buffer you from lows and bumps in other sectors
  • SIPs let you stagger your entry (and exposure) gradually.
  • Since entry takes place periodically, the size of the holding averages out over the long-term, across bull and bear phases
  • SIPs let your money reap from compounding and rupee-cost averaging over the long term (i.e. for your fixed SIP instalment, you’ll buy more units for lesser price when market is low, and vice versa)
  • They’re especially useful when you have a set portion of monthly income to invest, and you want to spread it across several instruments/sectors
  • They transfer the onus of tracking markets over to the fund manager
  • Since SIPs compound, so the earlier you begin, the better

That’s all good. But is now a good time though? With demonetization and US elections having shaken market sentiments, you may want to consider an even Equity is to Debt ratio via a balanced SIP instrument for now. The longer you stay invested, the greater the returns, so discuss with your advisor, if long-term financial stability is what you seek, then an SIP based equity fund is what he or she will likely recommend. And if you’re already invested in several SIPs, stay put. Patience is a definite virtue at this stage.

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