Apr 16, 2009 03:12 PM
20156 Views
(Updated Apr 16, 2009 03:13 PM)
There has been a lot of material written on SIPs and this is my sincere attempt to add value to the concept.
The markets fluctuation is totally unpredictable. It is not uncommen to see companies which post big profits loose out on stock market on the day of declaration of results! World is getting smaller by the day and it is impossible to put weightages which the market will put to happenings around the world or for that matter even within India. All the technical and financial analysis which you and I might do is a farce in front of the market forces. Just plug in to CNBC/ NDTV profit for 7 days and relate the "experts" prediction on next days market performance with the actual market movement and worse still the same "experts" giving justifications for the previous trading session and here you go. forecast for tomorrow.
What does an investor like you and me do in this case? There are two options:
Try and predict market movements(and join the evergrowing populi of "experts") and try and time the market OR
Take a long term view on investments and invest in Systematic Investment Plans in a disciplined manner.
Now. with all that preample I have given above, I would not be wasting my time on option 1 at all. Option 2 has two main components:
a. Long Term View: Investments in secutities particularly, Equity and Debt must be done with a long term horizon(greater than 10 years) to yield reasonable returns.
b. Disciplined approach: Do not get carried away by a few bad years when your portfolio might even return negative returns. In fact, investor with a long term horizon must rejoice in these scenarios as he/ she stands to gain in the long run and is accumulating more in the hard times to reap benefits in better times.
I put most of my Section 80C investments in SIPs of equity linked saving schemes of leading MFs and have a long term horizon of 15 years.
How about you?
Think about it!
