Although the broader market index Nifty50 spiked nearly 10 percent in the past six months, the past one month, it traded flat. With market volatility on a high, it is the opportune time for investors to understand the importance of investing on a regular basis.
For mutual fund investors, the most convenient and effective way to invest is through systematic investment plans (SIPs).
Thanks to the growing awareness among investors, this mode of investing has found gluttonous takers.
Currently, the number of Mutual Fund SIP accounts is more than 6.81 crore, shows the AMFI (Association of Mutual Funds in India) data for the month of July. The total amount collected through SIPs during July 2023 stood at ₹15,245 crore, nearly 25.5 percent higher than a year ago (see table below).
| Month | SIP contribution ( ₹crore) |
| July 2023 | 15,245 |
| July 2022 | 12,140 |
| July 2021 | 9,609 |
| July 2020 | 7,831 |
(Source: AMFI)
Wealth advisors speak highly of the virtues of investing in mutual funds via SIPs. They argue that there are a slew of advantages of the practice of staggered investing. First, investors manage to enter the markets at an average of different price points, thus getting the benefit of rupee cost averaging. Second, it eliminates the need to time the market or to even track the market on a regular basis. Third, it helps them achieve long-term financial goals.
| Advantages of investing via SIPs | |
| 1. | Benefit of rupee cost averaging |
| 2. | No need to time the market or track the market |
| 3. | Achieve long term financial goals easily |
Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services says, “Timing the market is next to impossible so it is always better if you invest systematically in the market for your long-term financial goals. SIP is most suitable for this. This helps in investing a small amount in a staggered way so that you will benefit from the rupee cost averaging in the longer run.”
“Volatility is a basic feature of the share market. Naive investors or those who invest in the equity asset class without accessing their risk-taking ability most of the time panic in volatility. Currently, we are facing such volatility,” she adds.
Ms Zende also mentions that SIPs help de-stress ourselves from constantly tracking the market and are good in achieving our long -term financial goals.
Sridharan S., a Sebi-registered investment advisor and founder of Wallet Wealth, says, “Investors are advised to invest in a staggered way in the next few months or so. This is the best way to invest in view of the current bull run.”
