RIDING VOLATILITY WITH S.I.Ps

MARKET MOVEMENTS ARE UNPREDICTABLE IN THE SHORT TERM AND FOLLOW A CYCLE. YOU CAN WEATHER THEM OVER TIME BY INVESTING THROUGH SYSTEMATIC INVESTMENT PLANS IN MUTUAL FUNDS

- By NARAYAN KRISHNAMURTHY / Illustrations by SIDDHANT JUMDE

If you believe that history is a guide, you will always find periods of market volatility, marked by dramatic swings both down and up. As much as you look back in history to draw out examples, it is a fact that uncertainty in markets makes investors jittery. Stock markets are volatile because nobody knows how policy changes or global events will affect a company's ability to generate profits. A little over a year ago, on September 26, 2024, the BSE Sensex recorded its all-time high of 85,836.12 points. As expected, market optimists predicted that the Sensex could reach the 100,000 mark by the end of 2024.

Market players and several participants are perennial optimists, and understandably so, as stock markets tend to move upward in the long run. However, in the short run, there are always phases when the markets decline and even remain flat. Such phases cause anxiety among investors, especially when their portfolios turn negative. Some investors have experienced volatility and are successfully navigating these times when the markets aren't rising or reclaiming their past highs. Many of these investors are those who have been investing in the stock market through mutual fund (MF) Systematic Investment Plans (SIPs).

They have developed a new way of thinking when it comes to investing and find small, regular investments through SIPs in MFs a less stressful way to invest. These investors have a strong commitment to saving money and a clear understanding of investing through SIPs. Some of them have experienced the convenience and ease of regular investment through SIPs, and have realised that this investment instrument best serves their interests. These experienced investors aren't reacting emotionally to these cycles and are instead seeking ways to adjust their portfolio to accommodate this changing market scenario.