Opinion | SIPs are the perfect way to invest in the present tough market condition
Live MintThe Indian equity markets have had a terrible last month as they struggled to react to the developing spread of the covid-19 or novel coronavirus and the resultant global shutdown. We studied the Indian equity markets for the last 20 years—2000 to 2020—to see how SIP investors have fared in normal environments and how that experience changes after a sharp market sell-off. ANALYSIS OF SIPs IN NIFTY 50 INDEX Normal experience: The average rolling returns from SIPs with tenures of three, five and seven years have been 17.1%, 14.9% and 12.8%, respectively. After each 25% fall in the index, we see that investors who start SIPs from these levels see dramatically better average returns compared to the investors in the scenario above. SIPs provide the perfect way of investing in such tough market environment because even if the uncertainty lasts a few more months, the regular allocations can help investors average out their entry costs.