Are SIP’s working in long term for Equity ??? Myths & Facts Below

POSTED BY Vinay Sarda ON August 19, 2012 6:43 pm COMMENTS (4)

Myth: SIPs prevent losses when done over long periods.

Fact: SIPs cannot prevent losses, even over the long term, if the markets are in a sideways phase. 

Myth: SIPs fetch higher returns than lump-sum investment

Fact: While the two are not comparable, SIP by itself doesn’t work to increase returns over the long term. It partly depends when you start and end your SIP
Myth: Even when investors have no idea what the market will do, they can expect to beat the market by using SIP

Fact: The basis for SIPs is the assumption that the market, on average, goes up over a long investment horizon. This assumption is true for a very long period (10 years or more) but may not be true for your investment horizon. There are no blind but safe bets in the market


Source : Moneylife

4 replies on this article “Are SIP’s working in long term for Equity ??? Myths & Facts Below”

  1. Dear Vinay, To sum it up – SIP is a vehicle to complete the journey not the destination itself. this should be clear to each of us before jumping into.



  2. Manish awasthi says:

    Well Vinay , not denying ur facts but SIP make a person disciplined ..

    Like year back i use to invest 20K in SIP . suddenly i stopped all of them thking that i will invest in lumpsum when maket corrects.When market corrected and nifty went to some 4600 in dec 2011 . i thought it will go down further and didnt invested anything . To my bad luck nifty reached some 5400 i lost the opportunity…
    So my decison of not investing in SIP dint worked well for me .

    1. Karthik says:

      exactly, Manish awasthi. I was also against SIP till March 2012 and tried to time the market to make lump sum investments (but, was not successful).
      After reading Manish Chauhan’s articles, especially the one on, I realized the mistakes I did (missed 2008, Dec 2012 dips), and have now created SIPs.
      Whatever be the myths / facts, SIP is the best we can do in investing in Equity, provided the limited knowledge and time available for market analysis.

  3. Vinay Sarda says:

    @ All

    More facts will be provided..

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