Understanding SIPs: Why timing the market may not matter for long-term investors
Motilal Oswal Asset Management
showed the return difference, irrespective of the date you invest, is minuscule over longer periods. For monthly
SIPs
done in
Nifty 500 index
for over 10 years, difference in returns for an investor who puts in money at the highest point of the month versus the lowest point is 1.13%.
"The probability of being lucky and consistently investing at the lowest index value each month is mathematically close to zero," says Pratik Oswal, head, passives, Motilal Oswal AMC. For a 10-year SIP in Nifty 500 index, an investor who consistently managed to end up investing at the lowest point every month earned 15.82%, while one who invested at highest point earned 14.68%.
Agencies
In the short term, however, the strategy of catching the lowest point every month may bear fruit. For instance, in a one-year SIP starting in April 2024, the returns for an investor who managed to invest at the lowest point in the Nifty 500 index were 1.17%. The investor who ended up putting money at the highest point lost 9.9%, a divergence of 11.04%.
Best MF to invest
Looking for the best mutual funds to invest? Here are our recommendations.
View
Details
»
"SIPs should go through atleast one market cycle of 5-7 years," says Amol Joshi, founder, Plan Rupee.
As the investment horizon lengthens, this gap starts to fade. By the time it reaches a 5-year SIP, the difference falls to just 3.08%.
The difference in these returns shrinks even more over longer periods. For 15, 20 and 25 years, the return difference narrows down to 0.73%, 0.71% and 0.59%, respectively. Wealth advisors said investors must focus more on investing consistently through SIPs over a longer period rather than trying to catch the bottom. "Time in the market is important as it is impossible for retail investors to time the markets," said Viral Bhatt, founder, Money Mantra.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
a day ago
- Time of India
Large caps are the new debt? Radhika Gupta says investors have forgotten asset allocation buckets
Live Events Large cap is the new debt and private markets are the new equity.' That's what Radhika Gupta , MD and CEO of Edelweiss Mutual Fund , heard and said that this summarises how risk appetite has shifted upwards in the last half decade, and investors have forgotten some asset allocation posted on social media platform X that, 'Large cap is the new debt. Private markets are the new interesting quote I heard today that summarises how risk appetite has shifted upwards in the last 5 years, and some asset allocation buckets have been forgotten'Also Read | MF Tracker: HDFC Flexi Cap Fund turns Rs 10,000 SIP to nearly Rs 21.50 crore in 31 years Traditionally, investors treated large-cap equities as offering stability compared to mid- or small-caps and debt investments, such as government bonds and high-quality corporate paper, were the 'safe' end of the over the past few years, the risk appetite has shifted upwards and some traditional asset allocation buckets have been forgotten by the the other end, private market investments — whether venture capital, private equity, or unlisted debt — are increasingly viewed as the true growth and alpha in another post said that the Nifty500 space is expanding with diverse passive options and finding the right balance between risk and return, while using factors smartly is the favourite index in this Nifty500 space is Nifty500 Multicap Momentum Quality 50, is what Gupta shared and further mentioned that though it is a long name it delivers three things such as, firstly Simplicity of multi cap portfolios. Secondly, quality needed in mid and small and lastly, the element of momentum that as a style has a proven track Gupta in her post shared some interesting data on various indices in Nifty500 space. There are five different indices based on Nifty 500 - Nifty 500 TRI, Nifty 500 Momentum 500 TRI, Nifty 500 Multicap Momentum Quality 50 TRI, Nifty 500 Quality 50 TRI, and Nifty 500 Flexicap Quality 30 Read | JioBlackRock Mutual Fund launches 5 index funds. Should you consider investing in these passive funds? Edelweiss Mutual Fund has the first and only index fund and ETF in this space - Nifty 500 is what the CEO shared."Edelweiss Mutual Fund is the first and only provider of an index fund and ETF tracking the Nifty500 in this space," the CEO highlighted, directing investors to for more details.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Mint
a day ago
- Mint
Radhika Gupta recommends ‘favourite' Nifty 500 index for smart investment, says delivers three benefits. Take a look
Edelweiss Mutual Funds Chief Radhika Gupta took to social media platform X (formerly known as Twitter), to suggest her 'favourite' Nifty index investment. The successful investor has a prolific social media presence and is known for sharing experiences and advice with her followers online, including her philosophy on savings, investments, SIPs, and stock market fundas. Sharing her pick, Radhika Gupta wrote, 'The Nifty500 space is expanding with diverse passive options. Finding the right balance between risk and return, while using factors smartly is the key. My favourite index in this space is Nifty500 Multicap Momentum Quality 50.' On her reasning she added, 'It's a long name but it delivers three things: 1. Simplicity of multi cap portfolios; 2. Quality needed in mid and small; and 3. The element of momentum that as a style has a proven track record.' She also attached market data tracking the particular index's performance against other indices; and in a disclosure, noted that her company Edelweiss MF has the first and only index fund and ETF in this space. Earlier on July 24, Radhika Gupta, who is a well-known proponent of systematic investment plans i.e. SIPs, advocated for spending your money another way. Writing on X, she noted that the fruits of hardwork are also to be enjoyed, not only saved. She admitted that while it is her job to sell SIPs, she also advovates for people to 'enjoy the fruits of your hardwork' and find a good middle ground between spending and saving or investing. 'At the end of the day, life is not a race of who has the highest NAV of most rupees, but who has lived most joyfully. The middle path exists, and it is good one,' she noted. Prior to this, in June, she cautioned ordinary investors against looking for high returns without understanding the risks, noting that finfluencers use 'fear of missing our' or FOMO to push 'crazy investment opportunities' that are meant for more seasoned players. She has also extensively batted for SIPs as a mode of investment that crores of common investors use to put their collective trust in the mutual funds market. She said that it is this 'collective trust' in investment instruments that give the Indian capital markets its stability; and also praised SIPs as the 'accessible savings-cum-growth solution' for common retail investors.
News18
a day ago
- News18
Stock Market Today: Sensex Rises 73 Points, Nifty Trades Above 24,650 In Opening Trade
Last Updated: The BSE Sensex rises by 73.2 points to close at 80,781.25 in the opening trade, while the NSE Nifty is trading marginally higher by 11.2 points to trade at 24,661.31. Sensex Today. The domestic equities market on Wednesday opened in green marginally ahead of the RBI MPC policy. The BSE Sensex rose by 73.2 points to close at 80,781.25 in the opening trade, while the NSE Nifty was trading marginally higher by 11.2 points to trade at 24,661.31. Among the 30 companies on Sensex, 19 stocks were trading in green. Among the top gainers were Adani Ports, Trent, Bharti Airtel, Kotak Mahindra Bank, and BEL rising by up to 1.72%. On the other hand, among the laggards were Sun Pharma, Infosys, Eternal, HCL Tech, and Tech Mahindra. In the broader markets, the midcap and smallcap indices were also down by 0.17% and 0.30%, respectively. Slippage past 24670 rendered the trend sideways yesterday. Despite bargain hunting lifting Nifty later in the day, momentum failed to sustain. 'Not surprisingly, only about 43% of Nifty 500 constituents closed above their respective VWAP signalling a negative bias. Yet, we believe that the 24450-24850 band needs to be broken for directional trades to emerge, with 24540-727 seen as a sideways range," said Anand James, chief market strategist of Geojit Investments Ltd. view comments First Published: Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
