Are SIPs still worth Investment?
As I have already told you before that, SIP (Systemic Investment Plan) is the best way to beat the market in the long run. Because it does rupee-cost averaging. But today I read the following article from ‘The Economic Times”.
The Economic Times: SIPs fall off ‘Long-term’ Investment Pedestal
Here are the few abstracts from the article.
“The recent bear phase has changed the way wealth advisors are looking at systematic investment plans (SIP) of mutual funds as an Investment mode for retail investors. With SIPs faring no better than any other method of investing, these advisors are no longer presenting this route to clients as a long-term investment one, as still being claimed by mutual fund houses”
- Ohh my God….!!!! what these people are talking about? Wealth advisors are now believe that SIPs are no longer effective? And on the top of that they advise their clients to stay away from SIPs right now when the market is all time low?…. Ohh well, I understand, they will tell their clients to start investing when the market will cross 21,000 level….!!!!
“There is no point in treating SIPs as a long-term investment route. If you keep investing into SIPs for, say, 25 years, your rate of return will not even exceed 10%. You’ve to book profits (redeem SIPs) to make money in SIPs,”
- Holy Shit….!!!! According to my Knowledge, Benjamin Graham has written in his book ‘The Intelligent Investor’ that long-term investment will always pay you better returns in the long run….and 10% return per annum in the long run can make a huge wealth. I did not know that Wealth Managers have changed this rule…. So I want to ask that, When this rule has been changed? Since Today Morning?….Ohh .. I was in my Clinic today morning so may be I have not heard this news…
“There is no harm in trying to time SIP investments.
Assuming that a bull run would last roughly 3-4 years, investors should keep a return target on their investments…”
- Crap….!!!! I also don’t know that when did this rule changed? I learned that the Rule is, “It’s not about timing the market but it’s time in the market.” So you wealth managers have changed this rule also huh…!!! without informing me….!!!!
“Stepping back in time, investors who had invested in SIPs in 2004 and 2005, should have fixed a target and exited when the market was at 17,500-18,000 levels. They may miss the remaining 3,000-point rally, but they still would have made decent returns. Wealth managers opine such an investment strategy will guarantee more money (than investing for a longer term) for investors”
- Ooops….!!! But how to time the market? When the Sensex was at 17,500-18,000 level, the wealth managers were telling that it will soon touch 28,000 or 30,000. and it cashed from 20,800 level. Can anyone give me the contact details of a Wealth Manager or advisor who can predict the market with this much accuracy? Well, actually I don’t want to meet him but Warren Buffet would definitely like to meet him….!!!!
“According to K Jaya Prakash, head-products, Franklin Templeton Investments, “We continue to believe that SIP remains the best and simple way to take exposure to equity markets.
Like normal investments, SIP investments also get impacted by market declines. History clearly suggests that markets will eventually recover, and investors who stay on course will benefit from the same.”
- Thank God….!!!! ‘Franking Templeton Investments’ is in safe hands.
Hats off… K Jaya Prakash who still thinks that people should continue SIPs and it will give good returns in the long run…!!!!
Here is my request to the readers……!!!!!
- Today I feel very old aged. Because when I read this article, I think that the rules of Money Management and Investing have been changed and I don’t realize it….!!!!
Please tell me which other new rules of this type are freely circulating in the market? Comment on this post…!!!
