SIP & the Volatile Market

A slight change in the investment market can greatly affect the investors and their earnings through investments. In a situation, when most investors tend to discontinue their investments in the market or let go of brilliant investment opportunities due to fear, the investors who have put their faith in SIP tend to develop as winners.

How does SIP help in the volatile market?

The volatile nature of the investment market makes it’s a risky area to tread in but when you are a SIP investor you can derive benefits even in a market that is battling the volatility.

Let’s look at the following points that explain how SIP helps in a volatile market:

  • Stable Income:A regular and systematic approach of investment infuses a sense of stability in the investors which helps them to access better investment opportunity and allows them to earn steady returns even at a time when most other investors are worried about the market conditions and want to discontinue their earnings by putting a stop on their investments.
  • Low Average Cost:The volatility of the market brings an opportunity for the investors who have put their money in SIP to purchase more units at a low price which they can sell at a higher price in a booming market. This helps the investors to lower the average cost of investment over time.
  • Nominal Growth: Investors who have invested in a long-term SIP scheme tends to override the chaotic market phase with low but steady returns amidst the volatile market and tend to achieve a nominal growth rate in the long run.
  • Market Knowledge: Since SIP investors don’t have to track the market movements, they can focus their time on gaining market knowledge and observing its behaviour. Which they would have wasted on tracking their investments if they weren’t a SIP investor. This opportunity to gain market knowledge equips the SIP investors with a better understanding of the volatile market and helps them to invest their money properly.
  • Wealth Creation: The SIP investors tend to buy more in the low phase this means they hold onto their units till the condition of the market improves. This not only helps investors to lower the average cost of investment but also helps them to create wealth through a steady flow of returns earned on their investment.
  • Persistence: Investors should focus their energy and flow of investments towards meeting their long-term goal; continuous investment in SIP during the volatile market will help them in the long-term because the phases of the market are prone to changes and don’t remain the same for a long time. Holding on to one’s investments in SIP in a chaotic market help investors to tackle the lows of the market and strengthen their opportunities to build a strong retirement plan for the future.

There are a lot of investment tip and tricks that help SIP investors to use the volatile nature of the market in their favour. Get in touch with our team of financial experts and professional advisors and learn how to use those tricks to earn better returns in the volatile market.

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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 - 85350

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