Why SIPs Should Be Increased in Volatile Periods and Why is it a Good Time
Why SIPs Should Be Increased in Volatile Periods and Why is it a Good Time?
Systematic Investment Plans (SIPs) thrive in market volatility due to the inherent benefit of *rupee cost averaging*. When markets are down, the same SIP amount buys more units, effectively reducing the average cost per unit over time. This strategy works particularly well during volatile periods, as it allows investors to build wealth steadily without trying to time the market.
Why Increase SIPs in Volatile Periods
1. *Leverage Lower Valuations*: Market dips offer a chance to accumulate high-quality investments at discounted prices. By increasing SIPs, you take advantage of these lower valuations to maximize long-term returns.
2. *Avoid Emotional Decisions*: Volatile periods often trigger panic selling. Sticking to and even increasing SIPs ensures disciplined investing, keeping emotions in check.
3. *Compounding Benefits*: Additional investments during market lows have the potential to grow exponentially during eventual recoveries, amplifying the impact of compounding.
Why is it a Good time to Increase SIPs
1. *Market Corrections and Global Headwinds*: With challenges like geopolitical tensions, high inflation, and rising interest rates, 2024 saw intermittent market corrections, presenting attractive entry points for long-term investors.
2. *India’s Strong Economic Growth*: Amid global uncertainties, India’s economic resilience shone through, supported by strong GDP growth, infrastructure spending, and domestic demand. This provided confidence in equity markets, especially for long-term investors.
3. *Emerging Sectors and Reforms*: The focus on clean energy, technology, and manufacturing through government policies like PLI (Production Linked Incentives) created opportunities for future growth, making 2024 a pivotal time to accumulate equity exposure.
4. *Peak Opportunity for Compounding*: Investors increasing SIPs during the temporary dips of 2024 positioned themselves to benefit from the anticipated market recovery in subsequent years.
In summary, increasing SIPs during volatile markets like 2024 not only helped capitalize on short-term uncertainties but also aligned with India’s robust long-term growth potential, making it a prudent decision for wealth creation.
Please start increasing your sips or start your sip today.
