*Why Stopping SIP is the Worst thing You Can Do in The Falling Market*
Behavioral experts state that investors feel losses more than higher returns. In order to not face any more losses, they tend to stop the SIPs or redeem the invested amount when the markets show a bear phase. BUT, *volatility is your friend* if you are a long time investor. Let us explain this with an example of two investors who invested in the same funds:
*Investor A* started a monthly SIP of Rs 5000 in 01/01/2003 in Nifty Index and continued till today. His investment value/corpus today (8th oct, 2018) will be approximately 41 Lakhs while the money he had invested was only 9.50 Lakhs.
*Investor B* on the other hand, started the SIP in same month 01/01/2003, but in the market crisis of 2008, he stopped it. His investment value/corpus today (8th oct, 2018) will be around Rs 21 Lakhs, while the money he had invested was Rs 3.45 lakhs.
Comparing the two examples, we can safely say that by investing a few more lakhs in the falling market while continuing SIP till today, Investor A has made an additional profit of around 20 lakhs.
*What to Do*: BUYING more equities when the market falls could be a hidden boon. Yes, you heard that right. Opportunistic investors understand that it is beneficial to buy stocks or invest in funds at a lower price (bear market).
*Note*:📝 It is highly recommended to stick to asset allocation and utilize this market-dip as an opportunity to invest. Please remember this bearphase isn’t permanent; what’s required is a diversified portfolio of your investments.
*Conclusion*:
It is advisable to stick to Large Cap Funds for the time being. *Large Cap Equity Funds* should be a core part of your portfolio if you want stable returns.
If you want higher returns in comparison to Large Cap, with a hint of risk, stick to *Multi Cap Funds*.
If you have very low risk appetite, *Debt Funds* are for you.
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