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Business News/ Money / Personal Finance/  Should you continue with your SIP despite volatility? Wealth advisors say this

Should you continue with your SIP despite volatility? Wealth advisors say this

As timing the market is not possible, investors are advised to continue their systematic investment plans (SIPs) to make the most of rupee cost averaging, advise wealth advisors

Market volatility should not be seen as an excuse to skip monthly investment disciplinePremium
Market volatility should not be seen as an excuse to skip monthly investment discipline

High valuations of mutual funds are playing a game of hide and seek with investors with volatility becoming the “new normal" in market parlance.

In this backdrop, retail investors tend to wonder whether they should pause their systematic investment plans (SIPs) until the market stabilises, or not?

The timeless wisdom of investing, however, affirms that sticking to an investment discipline is imperative for creating wealth over a long period.

We spoke to a number of investment advisors, and they categorically highlight the need to go with the flow regardless of crests or troughs. They also advise that one should refrain from pausing the SIPs come rain or shine.

“As nobody can time the market, it is vital to stick to investing discipline. It is liking driving a car, and the car could break down but that should not stop you from going towards your destination. Similarly, you cannot not achieve your financial goals if you stop making investment during market volatility," says Sridharan Sundaram, Sebi-registered investment advisor, and co-founder of Wealth Ladder Direct.

“When markets are volatile and there is a deep correction in the market, one can use that opportunity for acquiring more units. I refer to it as 'not available value' instead of net asset value. This means investors can buy more units during such time," adds Mr Sreedharan.

To invest more?

Some wealth advisors, on the contrary, suggest that investors can invest more money to make the most of attractive valuations, instead of contemplating to pause the SIPs.

Sridevi Ganesh, co-founder of Chamomile Investment Consultants, says, “Lower valuation is an opportunity to buy at lower NAV, so it does not make sense to pause the SIPs. Instead, one should top up the SIPs during this period."

“One should map one’s investments to long term goals and rebalance the portfolio based on time horizon of goals. In a long span of 20-25 years, one should witness at least three cycles including drastic fall and rise. Although it is emotionally difficult to hold on, it is vital to do so," she adds.

Preeti Zende, Sebi-registered investment advisor and Founder of Apna Dhan Financial Services, also shares similar opinion when she says, “Creating wealth through SIP needs patience and perseverance. One should not imagine becoming wealthy just in one year of investing. You have to be focussed in the long-term investing, keep track of investment and control the emptions."

“To be able to create wealth, one should invest in mutual funds through SIP for a long period of time," she adds.

In conclusion, one can say that market volatility is an essential part of a market cycle and in order to create wealth over a period of time, one must go through a number of market cycles.

So, the key to create wealth is to be patient and continue to invest.

Power of compounding in mutual fund SIP
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Power of compounding in mutual fund SIP

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Published: 15 Mar 2023, 08:08 AM IST
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