Answer Book question
No. Nothing in the stock market guarantees profit. What an SIP into a broad equity fund has historically done over ten-plus years is deliver returns meaningfully above deposits, with ugly stretches in between. Over one or two years it can lose money. Anyone telling you an SIP is "guaranteed" is selling something.
No. Nothing in the stock market guarantees profit. What an SIP into a broad equity fund has historically done over ten-plus years is deliver returns meaningfully above deposits, with ugly stretches in between. Over one or two years it can lose money. Anyone telling you an SIP is "guaranteed" is selling something.
An investor starts an SIP in a diversified equity fund in early 2008. By early 2009 it is down about 40 percent. He continues. By 2013 it is modestly positive. By 2018 it has roughly doubled. The first year felt like a mistake; the tenth year did not.
Equity returns come from business growth and are volatile. SIPs reduce timing risk but not market risk. Guarantees exist only in deposits and government instruments, at lower returns.
Your time horizon. under five years, equity SIPs are a gamble Your ability to continue through a fall The fund's risk category
Stopping during the fall, which converts a temporary loss into a permanent one.
Kerala has a strong preference for guaranteed returns. FDs, post office, cooperatives. That preference is rational for money needed soon. For money needed in 15 years, it quietly costs a great deal.
₹10,000/month for 15 years: FD at 6.5 percent ≈ ₹30 lakh; equity index fund at 11 percent (not guaranteed) ≈ ₹46 lakh; the same fund in a bad decade at 7 percent ≈ ₹32 lakh.
For a goal within three years, do not use equity SIPs at all.
Match horizon to asset Decide now that you will not stop in a fall Review once a year, not once a week
What exactly is an SIP? Should I stop my SIP when the market falls? Can I lose all my money in a mutual fund?
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