Why is investing in a systematic manner appropriate for most investors?
One-time investment is better only when there is a high degree of certainty that the market is going to go through a rising trend. Markets are volatile and predicting is very difficult; timing works only when exit and entry are in an investor’s favor. If an investor invests a bulk amount on a day and the market declines, the investor may panic and withdraw the amount leading to a sizeable loss. Also for most investors, one-time investment may not be feasible due to a lack of resources. In the case of systematic investment, it is not necessary for the investor to accumulate a huge amount at one go before making an investment. He can accumulate small amounts and invest regularly. An SIP also enables investors to start investing in equity early.
