Monday, 17 September 2018

How Much Time Should I Give To My SIP ?

Sbi sip

Hello friends and welcome to Amazing Adviser. Today we will discuss about a most important and frequent question which comes to the mind of every investor before starting investing. We all know SIP is the best way to invest in stock market for retail investors. There are many advantages of investing through SIP. But normally every expert in this field will advise you to remain invested for long term. They don't really define this "long term" with sufficient reason. In this post I'll try to define this "Long term".

So first thing is how much time exactly is "Long Term". Frankly speaking this is different for different people. For some people 5 years may be long term and for some 15 years. We all are different from each other and we all have different risk taking capability. We all have different level of patience. That's why long term differs from people to people. I will express my opinion and as per me if you are investing thorough SIP then you must remain invested for 20-25 years. On lower side minimum 15 years is must.

Main reason behind so many years investing is the market volatility. We have to understand the mechanism of SIP. SIP means investing in mutual fund consisting a diversify range of stocks regularly for a certain amount on a certain date. This is also called Discipline Investing. By investing regularly you are minimizing the risk of downside by averaging your cost of investment. But we should not forget that the cycle of market normally last for 5-10 years. This means if you have invested in a bull market then it may be possible that the next bull market will come after 10-15 years. 

Second point is to really know the definition of "Investing". I always think how people can say we're investing for long term and long term for them is 1 year or two year. I find a big misunderstanding there. What is Investment? Investment is something where we don't expect profit or loss, we expect wealth creation. We invest in our studies, do we really expect that this will be a profit or loss. We invest in house, why? Because we expect to live and not to sell. The one who buy house for buy and sell are known as traders or dealers. So when you are investing then give sufficient time.

In the end there is one SIP Mantra, treat your SIP as your child and invest in it for 20-25 years which normal parents do for their children. I bet SIP will give you better return then your own child. I know this and I strongly believe this.

So this was my opinion and I want to know about your opinion. Coment about your perspective about the term "long term" in SIP Investing.

Thank you
Happy Investing

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