Market Downturn Affects SIP Returns: Should Investors Stay the Course?
Market slump hits SIP returns. Time to worry or stay put?
Mint
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The Nifty 50 index has dropped over 8% year-to-date, impacting systematic investment plans (SIPs) for retail investors, with one-year SIP returns turning negative across equity categories. Despite a spike in SIP stoppages, experts recommend that long-term investors maintain their SIPs to benefit from rupee cost averaging during market corrections.
- 01The Nifty 50 index fell 8% year-to-date, affecting SIP returns.
- 02One-year SIP returns are negative across equity categories, with flexi cap funds at -17.63%.
- 03The SIP stoppage ratio reached 100% in March, indicating more discontinuations than new openings.
- 04Experienced investors increased their SIP contributions by 7.5% in March, totaling ₹32,085 crore.
- 05Experts advise long-term investors to stay invested and not panic during market downturns.
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The Nifty 50 index has experienced a significant decline of over 8% year-to-date, primarily due to global uncertainties and rising crude oil prices amid the ongoing US-Iran conflict. This downturn has led to negative one-year returns for retail investors utilizing systematic investment plans (SIPs), with flexi cap funds reporting an average return of -17.63%. The SIP stoppage ratio surged to 100% in March, indicating that more SIPs were discontinued than newly initiated. However, experts suggest that this figure may not be alarming, as many experienced investors continued to contribute, with monthly SIP contributions rising 7.5% to ₹32,085 crore. They emphasize the importance of staying the course during market volatility, as stopping SIPs could result in missing out on purchasing units at lower prices. Investors are encouraged to maintain their SIPs and leverage rupee cost averaging to enhance returns when markets recover.
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Investors may face reduced returns on their SIPs, impacting their long-term investment goals. However, those who maintain their SIPs during downturns can benefit from lower average costs when markets recover.
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