Tweets on 2011-09-12

by Vinaya HS on September 12, 2011

in Finance

Thanks for visiting Capital Advisor. I frequently update this blog to cover various topics on personal finance such as investment strategies, financial products that you should buy and ones that you really should stay away from, financial calculators, emerging themes such as early retirement and financial independence, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

From Value Research (emphasis mine):

Unfortunately, a proportion of investors seem to have the expectation that an SIP is a sort of a magical device that can protect them from all losses. It’s not. An SIP means that you keep investing though the ups and downs of the markets, ensuring that at least part of your investment is made when the markets are down. In the long run (and in equity investments, long run means three years at a minimum), this leads to higher profits. But to my mind, the real advantage of SIPs is as a psychological device that keeps you investing when the markets are down because, you know ‘buy low’ is the more important half of ‘buy low sell high’.

When I last checked about a week back, my own investments in mutual funds were down by about 8% to 10% (from the principal). And this is more or less over a year’s time. But I’m not worried because I did precisely what has been suggested here — “buy low.”

Did that at every dip. And we’re already on our way up (at least at the time when I wrote this). I would have loved to invest more, but then I ran out of accumulated funds. D’s accumulated funds were way more than mine and so her investment portfolio should jump back way better (it was down only 2.3% on a much higher principal).

Though I don’t agree with everything that Value Research says, I really do like the fact that they at least put a specific number on the “long run.” How many times have you seen that elsewhere?




Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

{ 3 comments… read them below or add one }

Ashok September 12, 2011 at 12:15 PM

HI,
I liked that..Invest in Every dip..I am also investing in HDFC prudence during a dip of 250+..I surely believe that it will give good ret. in long run..

Vinaya H S September 12, 2011 at 4:57 PM

@Ashok:

What time frame are you looking at when you say “long run?”

Rakesh September 12, 2011 at 8:26 PM

Vinaya,

Good and timely one too. Apart from my regular SIPs I have been manually buying more with every 100 point dip in Nifty. Even though my portfolio is down, I am not concerned as my time-frame is more than 10 years.
Can you share/write your feedback on Accident Insurance policies and Critical illness policies.

Rakesh

Previous post:

Next post: