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. Itâ€™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 â€˜buy lowâ€™ is the more important half of â€˜buy low sell highâ€™.
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?