4 Reasons To Continue With Your SIPs Even In Turbulent Markets

  Author: Kundan Kishore

During falling markets or turbulent markets, the fear of losses makes many investors commit the mistake of making exits from systematic investment plans (SIPs) of mutual funds. Here are four reasons why you should stay invested in your SIPs even in bad market conditions.

Avoids losses from premature exits Remember that your losses are notional and the impact is typically due to short term market movements. This is especially true with equity fund SIPs which invest in equities that typically experience short-term volatility. You could end up worse off with an exit during such times since equity funds typically reward investments over 8-10 years, or more.

Helps exploit market conditions SIPs make you buy lesser number of units when markets are at a high and more units when they are low. Over time, this brings down the average cost of buying units and helps enhance gains. A market downturn actually helps you buy more units at a lower price and helps you post even larger gains in the future.

Provides uninterrupted benefits of compounded growth

Regular investments over the long term, especially 8-10 years for equity funds, help you benefit from your money’s compounded growth. Premature exits from SIPs deprive you of this great advantage. Staying invested in your SIPs will ensure that your money keeps growing without interruptions; more so for typically high-growth equity funds.

Clearly, market volatility is a blessing in disguise for SIP investments. It is a smart idea to stay invested in your SIP investments regardless of the turbulence.

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