SIPS IN THE AGE OF VOLATILITY

WILL INVESTORS STAY THE COURSE OR WILL THIS VOLATILITY LEAD TO A LONG-TERM SHIFT AWAY FROM SIPs?

- BY TEENA JAIN KAUSHAL

FOR YEARS, New Delhi-based Ashish Kumar, 30, steered clear of the stock market, wary of its unpredictability. But as the post-Covid bull run became a hot topic at gatherings of family and friends, temptation got the better of him. “I invested large sums in equity mutual funds last year, expecting solid returns. But I’m staring at massive losses. I don’t know whether to cut my losses or stay invested. The steep decline in my portfolio has started affecting my sleep,” he says, frustration evident in his voice.

On the other hand, Rashmi Tewari, 42, from New Delhi, is calm amid the turbulence. The seasoned investor is continuing her systematic investment plans (SIPs) without a second thought. “I’ve been investing for 18 years. I’ve seen the global financial crisis, the Covid crash, and countless market swings. I’ve learnt that equity markets are cyclical. Patience is the key. You have to just wait for the tide to turn,” she says.

Two investors, two contrasting mindsets—one anxious, the other unwavering in conviction. Their experiences reflect the broader sentiment in the market where new entrants are learning first-hand that the stock market isn’t a one-way street to profit.

“The market today has two types of investors. Those who have been around for years and don’t panic. They see this as an opportunity to invest more. But the newer investors, especially those who have joined in the last few years, are feeling jittery. Many, particularly those investing through online platforms without a clear plan, are unfamiliar with volatility. When markets fall, their first instinct is to pull out. That’s why we have seen some redemptions,” says A. Balasubramanian, Managing Director & CEO, Aditya Birla Sun Life Mutual Fund.