Patience is the mother of all virtues #Equity Market # Share Market



Equities over medium to long term is a wealth creating asset. However, it is the nature of the equities to move up and down over the short-term. Trying to time the market over the short-term is extremely challenging. One solution is to maintain a long-term horizon and ignore the short-term fluctuations. On the other hand, SIP (Systematic Investment Plan) helps take advantage of ups & downs in market and mitigate risk arising from market volatility, provided the SIP is continued over long periods of time.

There are abundant stories highlighting the importance of long term investing and the importance of averaging through SIP investing. But, nothing can tell it better than the numbers do. Consider this, SIP of Rs 3000 per month in HDFC Top 200 Fund since inception (Oct 11, 1996) has created wealth to the tune of Rs ~82 lakhs as on Dec 30, 2016, despite the fact that the journey was bestrew with many global/local events like tech bubble, Asian crisis, Pokhran blast, Lehman crisis, Brexit, etc.


Illustration: HDFC Top 200 Fund

In the table below, we have taken the snapshot of SIP performance on quarter ends for the time periods as given therein. You shall observe that, SIP returns up to 3 years is very volatile. On the other hand, return on the SIP filed for the longer term, say 5 years & above, is steady and rewarded decently irrespective of market fluctuations in the short run.




  P.S. Past performance may or may not be sustained in the future

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