How does an SIP work under different market conditions and over time?
When investing through SIP it is not necessary to time the market. Investments will be made systematically every month or quarter depending on the option. Since the investment amount will be uniform, units accumulated during a bearish market, will be more compared to the units in a bullish market. To build a corpus over the long term requires an investor to stay focused, invest regularly and maintain discipline in the investment pattern. An amount as low as Rs 250 can be set aside every month. This will not affect the disposable income of the individual as well. Investing through the SIP mode ensures investing in all phases of the market. The investor will accumulate more units during a bearish phase and a lesser number of units in a bullish phase. This investor enjoys the benefit of rupee cost averaging under this method.
