It is generally said that 95% of the people who invest in the share market lose their money. Therefore, those who are not in the mood to take more risks in the share market, they are advised to invest in SIP Systematic Investment Plan.
SIP Investing Tips
One of the major reasons for this is that you do not have to keep an eye on your investment on a regular basis in mutual funds. The team of the fund in which you have invested, especially the fund managers, keep a record of your money. These fund managers take investment decisions for you so that they can make you profitable.
There are two ways to invest in mutual funds. The first is a mutual investment and the second is SIP. What is SIP? SIP means Systematic Investment Plan.
When investors want to invest little by little instead of investing in a mutual fund, they choose the SIP method. You can invest in mutual funds every month for three months through SIP. The special thing about SIP is that you can start SIP from Rs.500 per month. Recently, the country’s largest government bank, the Indian State Bank, has launched a new SIP scheme in which only Rs. 250 can be invested at the start.
SIP has become a popular method of investing in mutual funds. Many experts believe that if you want to become a millionaire, do SIP and forget it. But due to the recent decline in the share market, mutual fund investors who invest in the market through SIP seem to be very worried.
They are not able to understand whether to continue SIP or stop it or withdraw all their money from it. Let’s talk about the decline in the country’s share market.
For the past few months, the Indian share market has seen a heavy downturn. According to the record, both benchmark indexes, Sensex and Nifty, have fallen by around 12%. Whereas, the mid-cap and small-cap indexes have fallen by more than 20% from their current high level.
Sensex fell by around 425 and closed at the level of 75,311. Similarly, Nifty closed at the level of 22,796 with a fall of 117. This is the fourth business day in a row that has seen a fall in the market.
You can guess the level of decline in the domestic share market by the fact that Sensex has fallen by around 25% since the beginning of February. Whereas, Sensex has fallen by more than 10,500 from its all-time high. On 27th September, Sensex touched the historical level of 85,978.
Why is the market falling? How much loss did the investors have to bear this year? What are the reasons for the fall in the mid-cap and small-cap? The link to which will be given in the description. Now, let’s return to the topic, i.e., the concern of mutual fund SIP investors.
In fact, due to the sharp fall in the share market in the past few years, there has been a significant drop in the prices of units collected through SIP in the past year. The net asset value of most mutual fund schemes, i.e., NAV, has fallen. This has reduced the value of investors’ investment.
NAV is a unit of a mutual fund scheme. The price is called NAV. It tells the market value of the fund scheme.
Looking at the figures, SIP has given a lot of returns in the past 10 years. For example, if you have SIP of Rs. 10,000 every month, then you have invested a total of Rs.
12 lakh. If the return of the large-cap has been around 12%, i.e., the amount has doubled. Large-cap companies have a lot of capital.
If you had invested this money in the mid-cap, then the return is 3 times. And if you had invested in the small-cap, then the return would have been 4 times. Perhaps this is the reason why the attraction of SIP among investors has increased.
These companies have a strong track record. Top 100 companies are included in the large-cap. Most experts consider the investment in these companies to be safe.
According to SIP, there are companies with a market cap of 101 to 250 in the mid-cap. If you look at the figures of mutual funds, then in 2021-22, around Rs. 1 lakh was invested through SIP.
But in 2023-2024, this figure doubled to more than Rs. 2 lakh crore. In January, Rs.2.37 lakh crore has been invested. However, the figures of the Association of Mutual Funds in India, i.e., AMFI, show that the investment in equity funds has been 3.6% less than last month. And this month, a total of Rs.49,687 crore has been invested. In December 2024, Rs. 41,155 crore was invested in the equity mutual fund.
According to a report by the Economic Times, people who started investing in equity mutual fund schemes last year are facing losses. According to the report, the investment value in these schemes has been reduced by 7.1% through monthly SIP. Small-cap funds have suffered the most losses.
Small-cap fund investors have suffered a loss of 10.6%. Small-cap mutual funds are those who invest in small companies. According to the market cap, apart from the top 250 companies in the share market, small-cap mutual funds invest in the rest. Now, as there is a continuous decline in the market, which is causing losses to investors, there is already more concern among investors.
Experts are increasing this anxiety. One of the great scholars of the mutual fund industry is Shankaran Narain. Shankaran Narain is the chief investment officer of ICICI Prudential Mutual Fund.
His name is quite famous in the mutual fund industry. Recently, he said in a program hosted by a group of mutual fund distributors, that investors who have started a systematic investment plan in small and mid-cap funds since 2023, are going to have a very bad experience. The year 2025 can be the most dangerous year since 2008.
He has asked investors to sell small-cap and mid-cap funds. In 2008, investors lost a lot of money in banking shares. Now, since in the last two months, small-cap and mid-cap indexes have fallen by 20-22%, it is natural for investors to be worried.
He said that the return of SIP may be negative in the coming years. Investors should not get involved in mid-cap or small-cap funds. SIP should be done in large-cap or hybrid funds.
He says that the prices of small and mid-cap shares are very high. Now people are wondering whether to continue SIP or stop it, or withdraw all their money from it. This is also understood by scholars.
Ayush Mishra, a business standard journalist, the research head of Anant Rathi Wealth Ltd, Chetan Shannoy says that it is natural for investors to be worried when there is a fall in the market, and most investors get scared. But history shows that such falls are common in the market. Should Investors sell their SIP, stop it, and continue it?
In this regard, Shannoy says that do not be afraid of the current fall, do not withdraw money, and continue your SIP. He says that if you have extra money, then think about investing more during this fall, and take the best advantage of this market fall. Another brokerage firm, Edelweiss Mutual Fund, said in a post that stopping SIP during a fall in the market is exactly like going out of the field due to the excitement of the game.
It is made possible by staying strong. A report by Edelweiss Mutual Fund shows that when the SIP return was negative for a year, then by continuing the SIP and investing for a long period of time, not only is there a loss, but also a profit. However, some experts also believe that investors should learn from their mid- and small-cap investments.
For example, if you have fallen by 20% in the mid-cap fund and 10% in the small-cap fund, then it is necessary to balance it again. Scholars believe that do not make the mistake of stopping or stopping the SIP during a fall in the market. By doing this, you will be able to achieve your financial target.
Experts say that by investing in SIP during a fall in the market, you will get more units allotted because the prices of shares have fallen and the NAV of many mutual funds has fallen. The benefit of this is that more units will be allotted to your investment every month. This will increase the return in the long term.
For example, if you are running an SIP of Rs. 1000 and assume that the scheme in which you are investing, the price of one unit of it has fallen to Rs. 20.
In this way, you will get about 50 units on this investment. But if the market was up, then you would get less units. Therefore, scholars believe that you should not stop your SIP at all.
Instead, if possible, start a new SIP or increase the current SIP amount.
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