SIP Investment Strategy: Market volatility is not a very uncommon phenomenon, it can be observed both on a daily or in a long-term market movement. A recent example shows that the market has been volatile since September 2024 and is majorly drawn towards a correction. This indicates that the stock market has been under pressure for the past 5 months. Most investors cannot keep up with the SIPs on a long-term basis such as 10, 15 or 20 years, so the correction might scare up the investors.
Why do investors fear?
Many investors are not able to wait for 5 years when it comes to SIP, the majority prefer to invest continuously when the market sees a bull trend. However, When there is a bearish trend they usually prefer to redeem their unit in haste, which hinders them from making profit properly. A recent study by Motilal Oswal explains that instead of fearing market volatility, investors should invest for at least 7 years to get the best returns on their investments.
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The report mentions the analysis of 5 and 10 years along with the 7 years return. It includes the monthly rolling SIP returns of Nifty 100, Nifty Mid-Cap 150, Nifty Small-Cap 250 and Nifty 500 Mutlicap 50:25:25. This period includes the important events such as the financial crisis of 2008-2009, the 2013 sell-off and pandemic period.
The period includes the starting and ending of SIPs, which clearly shows that investors who kept investing for the long term despite the financial crisis received good returns. Also, a period of 7 and 10 years diminished the chances of losses whether in small-cap, mid-cap or large-cap.
7 years SIP
Nifty 100
In the 7 years, the poorest performance has shown a yearly return of -0.8 per cent for the Nifty 100. However, the average return was 11.3 per cent and the best return was 18.1 per cent. The chances for loss were 0.6 per cent in the 7 years.
Nifty Mid-Cap 150
The Nifty Mid-Cap 150 showed the worst return of 0.4 per cent, with an average return of 15.3 per cent and the best return was 27.3 per cent.
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