When we initially launched Coin, for the sake of operational ease, we only allowed SIP creation dates in 5 day increments like 5th, 10th, etc. One common query we kept getting was to allow all dates. I used to explain to investors that the choice of the date of the SIP didn’t really matter, and the returns would always be the same, and convincing them, used to take some effort. WhiteOak MF recently published this simple SIP study explaining the same thing.
SIPs work because they are a simple and beautiful way of investing money regularly. While there are endless ways to “make them better,” most of these tweaks don’t really matter in the long run. The best thing is to always keep it simple.
Just as a refresher, here’s what an SIP is and isn’t.
Does the date make a difference in SIP returns? No!
Note: Such data points are very deceptive The best days and the worst days occur together. So if you are missing the best days, then you are missing the worst days too
The date of the SIP or the frequency (weekly, monthly) doesn’t matter. Don’t waste your time picking the best day or frequency. That’s like using a kundli to make your investments.
Timing is hard! Obviously. Unless you are genius just invest regularly every month.
The longer you stay invested, the lower the odds of negative returns. 5 years is not long term either.
There will be periods of high returns and periods of low returns. If you stay invested through it all, your returns will be good on the other side.
Diversification is indeed a free lunch. Having a sensible asset allocation will help you maximize your returns, lower the risk and behave well. Choose an allocation between equity, debt and gold that you are comfortable with and enables you to reach your goals.
I believe it does matter. The whole propaganda of ‘do monthly SIP,’ which is gaining popularity, is a big scam. Statistically, even with just 5% of market knowledge, one would be qualified to monitor 2-4 parameters and easily do a manual SIP through lump sum on low swings. This way, they would not suffer the same pain as monthly EMIs (no difference in depression), and in addition, they could gain more than double or triple the returns of what monthly SIP can offer. Just because the whole crowd considers something right (most of the views coming from those who represent companies, while the companies’ goal is only to fill their pockets), doesn’t mean it is right. If such is the case, why would companies like Nippon stop lump sum investing in small-cap funds, etc.? They know there are people who know how to get around this euphoria of monthly SIPs and get around the ‘chahe koi bhi price mein kyu na ho lelo’ scheme to make more profits.
While I do respect your and others’ opinions about the above post, I believe it is only for people who have 0% knowledge (like if you don’t even know how to see VIX, etc.). If I get time, I will post and prove it through numbers how there are alternatives to achieve much better returns.
My humble request to newbies is to do independent research first and not just blindly follow what everyone says. Just try to research the idea of gathering more units at a lower price.
I think you can counter the above research only with numbers. So if you have your own calculations then kindly share otherwise it will count as your personal opinion only.
Even if this is true for many educated folks,
their time and attention-span required to research/monitor the markets is also a factor.
This aspect is very extremely relevant for folks in the early days of building their career.
when there is a lot of scope for one to improve at one’s “day job”.
just needs a lot of focus and time (the more the better).
when the amount one has available to invest is less than what one will have later in life.
Earning a few percentage points less from one’s initial investments is fine, if doing so frees-up some time for oneself
that one can instead invest into other better rewarding ventures
like upskill-ing oneself or “going above and beyond” at what one is already qualified to do best.
SIPs create discipline for newbies, that alone is the no: 1 criteria to become a good investor. If a person can save as much as possible in the early years - debt or equity or hybrid, it will give a good corpus to work on 10 to 15 years hence.
Professionals has to do independent research & not count on the reports from other AMCs, MF houses & brokers. That way you are right, and to become a professional - someone has to start somewhere.
Yes. if one understands it, its possible to get more reward for given risk. Its free lunch indeed.
from the attached presentation itself
“Due to the dynamic nature of the global markets and economic cycles, it is not possible to time the winning asset class consistently”
Still fundhouses claim that they have Proprietary Models to figure out winning assets!!
Nothing against any fundhouse but its something like we have Proprietary Model to select stock and we can do better than index.
Still looking for multiasset mutual fund offering which “do not predict” the winning asset, but passively keeps constant allocation across assets.
Is it buying on dip? I am not trader so dont understand most of the jargon, but willing learn.
If you can explain a bit, would love to explore concept.
What I think is a better way of doing the same is to keep the SIP semi-manual and semi-automatic.
What I mean by this is that, lets say fix an amount of 5000 for monthly sip, and then looking at some really simple parameters like RSI, VIX, or simply past month return and then increase or decrease manually the amount of ₹2000 as per market conditions. It is easy when done with coin SIP.
Of-course, it demands time but not as much doing deep research.
what it does is that it keeps the discipline as investment is a must monthly, and also gives you an opportunity to increase your returns. It also insures that even if you are busy for a month or two, and could not look into it, the investment doesn’t stops.
And remember something is better than nothing, so if you can’t make time for it(which is the condition of most people), simple a monthly sip is best…
The best days and the worst days occur together. So if you are missing the best days, then you are missing the worst days too
