The SIP investors shouldn’t be
deterred by the irregular movements of the equity marketduring the bear market
phase. The prime philosophy that underlines an investment in a SIP is
continuity. Investors should continue their investments in SIPs, regardless of
the market condition to avail maximum benefits in the long run.
relationship between SIPs and bear market:
Though bear markets are labelled as
stressful periods they are in fact deemed to bring terrific investment
The following reasons highlight why
the bear market is a good friend for SIP investors:
- Rupee cost
cost averaging is a feature that substantially brings down the average cost of
purchase over the time and it can only function effectively when the investor
makes active investments even in a fluctuating market. If SIP investors
continue to invest in a bear market, they will be able to distribute the risk
factor over the years and will be able to achieve the goal of buying low during
the bear market and selling high during the rising market.
- Power of
SIPs offer the investors with the benefit of reinvesting the sum they receive
from their investment and therefore provide them with the benefit of earning
more money through its compounding feature. Investors can further use the
reinvestment feature in their favour during the bear market and earn higher
returns in the long run.
- Recovery: The fact that
the bear market recovers quickly represents the phase as a great time for
making investments and accumulating units at a lower cost. The long-term aspect
of investing in SIPs tends to minimise the effect of market volatilities and
negative returns over the years and keeps your long-term financial goals
- The market
SIPs offer the investors freedom from market timing; even when an investor has
made a risky investment in a dangerousmarket, they can recover the loss and end
up earning good returns by staying invested over the years.
to invest in a bear market:
- It is only during the chaotic market
conditions when the investors are able to gauge the quality of their investment
portfolio. To cope with the bear market, investors should focus more on quality
- Thorough knowledge about qualitative
investment helps the investors to identify stocks with great growth potential
and scope of attractive valuation. Inculcate a sense of expertise and
investment knowledge to be able to reap maximum benefits in a bear market.
- Adopt a disciplined approach towards
investment so that you can tide over the momentary fluctuations in the market
over the course of investment through a steady flow of returns.
When compared to the length of bull
markets, bear markets are usually shorter and therefore tend to be more
volatile than the former. Investors can use it in their favour by increasing
their allocation of assets through different investment options.
The bull and the bear markets are integral and
inevitable part of the economic cycles; consult our professional financial
advisors to gain insights and to make the most of a bear market through an
investment in SIPs.