Systematic Investment Plans (SIPs) were designed to be a simple, hassle-free option for investors who would not have time every day to manage their investment portfolio based on the market volatility and still be able to grow their wealth. The idea was to just start an SIP and let it do its job. However, in the last one year, investors have seen a tremendous amount of volatility in the market, which has made many of them nervous about their decision to invest in mid-cap and small-cap funds through SIPs.
However, investors must remember one important lesson and that is not to react on short-term volatility and market trends, and get nervous about it. Investment is all about balance, patience and sticking to a solid plan.
Highlighting this point in one of her social media posts on Monday, Radhika Gupta, MD & CEO of Edelweiss Mutual Fund, said that SIPs were designed as a simple, long-term investment tool, and mid-cap and small-cap investments are beneficial if balanced properly. Stressing that market cycles can make returns look bad in the short term, she emphasized the importance of holding SIPs for at least 10 years.
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Radhika argued that liquidity is crucial and can be managed effectively without excessive large-cap holdings. She cited their mid-cap fund’s track record, showing no negative returns over a decade, and urged investors to ignore short-term fear mongering, focus on a good fund manager, and stay invested for the long run.
Giving his views on the right investment approach to SIPs, Adhil Shetty, CEO of Bankbazaar.com, said, “Short-term market fluctuations should not deter long-term investors with well-diversified portfolios tailored to their financial goals. Historical data shows that continuity, goal-oriented investing generates strong returns in the long-run. By avoiding impulsive decisions, investors can leverage SIPs as a strategy for wealth creation without getting worried for daily corrections in the market. A balanced SIP, held for a longer duration, remains one of the most effective ways to achieve your financial growth.”
Balwant Jain, Tax and Investment Expert, said, “Whether you go for large-cap or small-cap funds, the key is to continue with your SIP for a longer period of more than 7 years, ignoring the noise. Since the small-cap category is more volatile but gives you better returns,
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