A study by WhiteOak Capital Mutual Fund aims to help the investors to make better-informed decisions for their investments.
The report highlights that the volatility reduces as the investors increase their investment horizon. In other words, the longer the investment horizon, the higher is the probability of receiving decent returns.
ETMarkets.comAn investor should accept that it is impossible to predict the exact top or bottom of the market cycle. One should create and follow a valuation checklist whenever one deviates from their strategic asset allocation. This helps investors to reduce portfolio-level volatility up to some extent while they are making investments in the equity market.
ETMarkets.comAn investor should know that the important thing is time in the market not timing the market. If an investor waits for the right time to invest then that could lead to missed opportunities.
The next question investors have is which date to choose? Starting of the month or middle or end of the month? The study highlighted that the index data reveals no significant difference in the average return of different dates for 10 years SIP.
ETMarkets.comThe best date to make SIP is when the investor receives money in his/her bank account like salary credit date.
The study also points out that in the long-term it hardly matters if the investors invest daily, weekly, monthly SIP frequencies. All these three frequencies gave similar returns.
ETMarkets.comEquity as an asset class is relatively very volatile and there can be periods of low returns in the initial investment journey of a long-term SIP. The study revealed that the SIP, which has delivered comparatively lower returns in the initial 5 years, has delivered a better return on a 10 years basis (on an average).
Some fund houses offer SIP Top-up facility as well. This facility helps investors to start with a small investment and gradually increase it. SIP Top up helps the investors to reach their goals faster, start with less and still achieve the financial goals and take disciplined investing to the next level.
Many mutual fund investors also ask if they should keep changing the index or stay invested in the same index? The study showed that frequently changing lanes can be both stressful and harmful. Investors should focus on reaching the ultimate financial goals by continuing SIP over the long term.
The monthly SIP contribution by investors over the last seven years has grown by around 6.6 times.The contribution in May 2016 was Rs 3,189 crore which went up to Rs 20,904 in May 2024, according to a study conducted by WhiteOak Capital Mutual Fund.
