SIP or ULIP economics


New Member
Hi All,

The experts would probably found my confusions a bit childish, but i am sure a lot of less experienced like me won't have a straight answer for my confusion/query described below. Anyway comments from all are invited. I am sure lots of people including me will benefit from the comments coming on this topic.

As far as i understand the usual way of SIP/ULIP funds is that they invest the funds across different segments of market through a fund manager. It's up to the market experience & skills of the fund manager which determines the growth or fall of the fund. So far ok.
What i don't understand is that usually SIP's/ULIP's have a locking period of 3-5 years & often it is said that these funds should be seen from a profit point of view on a long time period like 10 years. OK point taken that investor should expect profit from such funds on a longer time frame(5+ yrs), but really is this true & if yes than how does it happens? I see that market fluctuates a lot within a year, so on a longer time period, the frequency is still more. If I invest say 30000 annually on a quarterly basis, it is very much possible that some of my units will be bought at a high NAV while others will be brought a low NAV. My overall profit thus on a long term depends on how much my low priced NAV's at the time of buying, exceed my high priced NAV's. I find it too random for anyone to actually ensure that on a long term major portion of the NAV's are bought at a low price, he gains substantially from the concerned SIP/ULIP fund. In fact an extreme case seems possible that though a fund grows in certain time(say 5 years), but an investor actually runs in loss, due to most NAV's bought when they were at high price.

I suspect that mu understanding detailed above matches with the facts & i hope the system must be a bit more complex, so any comments/ tips/ thumb rules are cordially invited to ensure that an investors NAV's do give profit on long term.

Also funds like ULIP's work as savings account after the locking period, so how smart is it to withdraw money from the fund from time to time say after every profit burst?



New Member
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