Disregard doubts to continue long-term SIPs

A person’s investment behaviour is mostly guided by their psychology, which is often irrational and bound by fear. Their biases often make them critical about their investment decisions which are otherwise beneficial for them. The question to be able to continue SIP over a period of 10 years is one of such investment issues. As per SEBI’s report, only less than 2% of people tend to continue their SIP for over a 10 years rest succumb to various doubts and uncertainties and discontinue their SIP. Being subjected to those uncertainties make investors forget about the basic principle that works best for SIP, the time horizon.

Reasons to continue SIP for a long time

The reasons why a 10-year SIP is difficult to continue may be many from the point of view of an investor, but that doesn’t necessarily mean they are logical enough to stop your long-term SIPs. Let’s recall the benefits of the SIP route that are most effective when practised for a long time:

  • Small Investment: The opportunity to invest as little as Rs.500 through SIP makes it possible for those people to earn extra incoming who don’t make much money or have sufficient savings at their hand to make an investment. Over the years their small investments can pile up and become a sound source of income for them to rely on in their future.
  • Power of Compounding: The ease to start an investment with a minimum sum works out for the best when done over a long period of time. A decade long investment through SIP allows investors to build a healthy corpus over the years even with small investments. This especially helps those investors who are down for planning their retirement in their mid-40s and want to have a healthy corpus at their disposal but the time they actually retire. 
  • Riding out Risks: The unpredictable nature of investment market comes with its share of risks and rewards that is often difficult to predict. What helps the most during the rise of the volatile phase of the market is the long-time horizon of SIP investment. Since the market doesn’t remain same all the time, the long-time horizon helps investors to ride out the blow of the risks by either holding onto their units or by recovering through steady earnings throughout the course.
  • Savings and Market Timing:  A decade long investment horizon imbues a sense of financial management in the investors; they are more equipped at saving money and investing it on a regular basis. Besides financial management, investors are also well aware of the working of the market under differ situation by the end of their decade long investment venture. This helps them further to gain freedom from timing the movement of the market and to make habitual investments without harbouring unrealistic fears about the same.

The long-term SIP helps investors to achieve their long-term financial goals and also allows them to adjust their investments as per their need. Consult our financial advisors to gain more insights about how to avoid doubts and fears when it comes to making long-term investments.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 167127

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