me S.VINO PRAVEEN, MY MAIL ID peevee.automobilist@gmail.com , i like to know more about the sip schemes in relience or another fund offerings which are good to invest.... my risk factores are high ...suggest me......
Sir there is no point showing disadvantages of SIP in case of bull market.. ur NAV has just gone up and that is why ur returns less.. who could tell u in august 2004 that markets will go up like hell in coming year.. no one can.. and to avoid that we go for SIP.. if market crashed for 1 year after ur purchase then u would have seen advantage of SIP...so this illustration has no point..as u drawing a comparison on something which has already happened..can u invest something huge today at 17700 sensex..and say SIP wont work.. does anyone (who has knowledge of market movements) put all wealth in mutual funds right now and say its better than SIP?????
Hi, I just want to give another point of view. You mentioned that if you had invested the entire amount in Aug 2004 you would have made more money. True. But did you have Rs 60,000 (Rs. 2000 per scheme * 3 schemes * 10 months) at that time? And if even you had the money, you need a lot of guts to put all your savings at one shot. What people dont understand is that investing Rs. 60,000 at one shot is not equivalent to investing it over a time frame, irrespective of the instrument.
It was a very simple expalnation of why a SIP is not always great. I appreciate it. In fact i have recently invested in a few SIPs and totally agree with your views on the same. I look forward to some more articles from you.
Even i have seen the way market has moved and the way NAV raises. SIP doesent seem to work to people who realize the fundamental assumptions are wrong. Even i feel that SIP is not the best way to invest for the following reasons:
(1) If the NAV comes down drastically in every bear phase then why would anyone invest in Mutual funds. The table that you have given explains it all
(2) Assume I give a cheque for SIP of 3000 per month to be encashed on 10 of every month. What is the guarentee that the NAV will be at low on 10th. It may so happen that because of F&O rollover on 31st the market may come down every month and by 10th of that month the NAV is at its peak...
(3) When was it last time that people bought Shares in SIP ?? If you are buying mutual funds you are buying shares indirectly. So NAVs more or less follow the indices. Has anyone told his financial manages to buy reliance on 10th of every month? it really sounds ridiculous!!!
SIP is a good for the following reasons (1) if you do not follow the market and still want to be part of it (2) you spend your money and you want to set aside money before it reaches you.
What are you trying to say? Do you read the article that you write before posting?
SIP is not for people like you trying to make a fast buck. Cant imagine someone saying that he can time the market. If you can do that, you should be placed well above warren buffet and graham.
go and do some homework on what SIP is before you conjure up some gibberish
I started investing using SIP since april '05. As the table shown above even the NAV's of the all the scheme's i have opted are going up and not down. To say i have invested(right word is saved) almost Rs.25,000 till now. Its all happened because of SIP otherwise i would have ended up in spending that money. Eventhough getting less units month by month still i am happy bacause i am saving some money and not in a hurry for them.
If one has time to look at the market and considerable amount is available in savings account, they can go for purchasing additional units when the market is down. This might fill the gap of higher NAV when the market is up.
You have not grasped the basic concept of SIP. The idea is to average your price over a business cycle, in stead of trying to time the market. People who advised you to invest in equity or equity related MF, perhaps forgot to tell you that you should be in it for long, i.e. be an investor, not a specualtor. So trying to judge the performance of the SIP over one year is rather naive. One business cycle in India should be at least 4.5 years, and that is a reasonable time frame to evaluate equity investments, and more so an SIP.
RE:Why an SIP is not always great
by sanjay gohil on Jun 23, 2008 10:33 PM
Dear Mr. D,
I am absolutely in favour of SIP. The perfect answer for your discussion was given by Harish and Subir. No one can time the market. Just think that what would happen if you had invested your 60,000 rs. in one shot in month if January this year when even expert are talking about sensex will go up to 25000 mark. SIP is for those people who wants to go slow and steady. It is not a way to make fast buck.If some one have that much ability to time the market then he should directly invest in to equity instead of taking a route of mutual fund.
