Time for Value SIP

[drsambu123]

Dear friends
I hope all of u continuing ur SIP. Here I want to discuss about value SIP. Market has corrected >10 % from the recent peak. I feel its time to enhance the SIP(or additional purchase in a existing SIP) from debt or from other source. Still market may go down. So we should be prepared to invest more if so.
I expect our Senior people to comment about this and give their inputs regarding the methods/ideas of enhancing the SIP

 

[asterix24]

Dear Friend,

It is an excellent and valid question that you have posted. Though I don't promise to answer to every point put by you, I do aim to provide a perspective and some insights to take an informed decision.

When markets are going down, your existing SIPs will accumalate more NAVs. Addition of newer SIPs is a bit risky as you don't know when the markets will rebound. Indian markets have exhibited huge amounts of volatility and hence, I am a bit skeptical of adding new SIPs when markets are going down.

Another interesting part in your query is about the timing part. SIPs are designed *not* to time the market. However, if one tries to time the market based on the market movements, I think it's a contradiction.

No one knows if markets have bottomed out or have some correction in place or how deep the correction is. One influential factor for markets (good or bad) is budget which is currently around the corner. One can definitely expect some reaction from the markets and no one knows where it is going to head.

Hence, if I were you, I would probably do some cherry picking i.e. very specific targeted fund investments (with a clear mandate of writing off the loss if something nasty happens) and generally would hold on to cash. However, if your SIP is ending, you can consider increasing your SIP investment amount. These cherry picking would be a rarity and I would be really surprised if one doesn't have prior investment into the same.

However, starting a new SIP just because markets have corrected is a bit risky. Please do take an informed decision.

Happy Investing !!

 

[drsambu123]

Dear Friend,

It is an excellent and valid question that you have posted. Though I don't promise to answer to every point put by you, I do aim to provide a perspective and some insights to take an informed decision.

When markets are going down, your existing SIPs will accumalate more NAVs. Addition of newer SIPs is a bit risky as you don't know when the markets will rebound. Indian markets have exhibited huge amounts of volatility and hence, I am a bit skeptical of adding new SIPs when markets are going down.

Another interesting part in your query is about the timing part. SIPs are designed *not* to time the market. However, if one tries to time the market based on the market movements, I think it's a contradiction.

No one knows if markets have bottomed out or have some correction in place or how deep the correction is. One influential factor for markets (good or bad) is budget which is currently around the corner. One can definitely expect some reaction from the markets and no one knows where it is going to head.

Hence, if I were you, I would probably do some cherry picking i.e. very specific targeted fund investments (with a clear mandate of writing off the loss if something nasty happens) and generally would hold on to cash. However, if your SIP is ending, you can consider increasing your SIP investment amount. These cherry picking would be a rarity and I would be really surprised if one doesn't have prior investment into the same.

However, starting a new SIP just because markets have corrected is a bit risky. Please do take an informed decision.

Happy Investing !!

Thanks for your valuable opinion. Yes i understand the risk if market corrects further or remains in bear phase for long time(1-2 years). I am a long term investor.I am prepared to buy even more if market corrects 20 % +..... Even more if market corrects 30 %+ .........
I will do additional purchase until i exhaust my liquid funds( i have 20% in debt funds )..... After that i can continue SIP and try to contribute more to SIP by reducing my expenditure(or postponing some big purchases).
How many of u agree with me ?