Financial Planning: Make the most of SIP in Volatile Market Conditions

There are several ways in which an investor can take exposure to equities. Investors can either choose to go direct by investing directly into stocks or can opt to invest through an equity mutual fund. Over the past few years, systematic investing into equity mutual funds via Systematic Investment Plans (SIP) has been gaining traction. Investors today are opting to be disciplined in their investments, which is an encouraging sign for creating a thriving equity culture among the masses. Of late, as the markets have become volatile, some investors are having second thoughts about their SIPs. Many, in the anticipation of a correction, are stopping SIPs which is an erroneous move.

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R.C.Rawal (B.Com, LLB, F.CA, Chartered Accountant), Director, Imperial International Pvt. Ltd

For the uninitiated, an SIP is a mode of investing that allows an investor to invest a fixed amount in a mutual fund scheme periodically, at fixed intervals. This is similar to a recurring deposit where you deposit a fixed amount every month. Since SIP is automated, one need not fear about missing out on investing in any month. While an SIP looks like a simple arrangement, when done in a disciplined manner over a decade or more, this emerges as one of the most powerful tools to create long term wealth.

Here is how an investor can make use of SIP to make the most of a volatile market