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
- 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.
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 avoiddoubts and fears when
it comes to making long-term investments.