Investment, Systematic investment plan

Best Time To Start A SIP Is Now!

Looking Forward to 2019!

A new year is a new opportunity. 2019 being an election year in India brings even more opportunities. We’re talking about the investment opportunities for people. It’s true that we cannot accurately predict how the market will be in the future but that does not mean we should not study the past trends of the market. The past election years had given a boost to the Indian stock market. Whether it be in 2004 where it gave a boost to the stagnant market or in 2009 when it helped stabilize and later give a push upwards to a falling market. The last Lok Sabha election in 2014 gave an unprecedented momentum to the stock market. The rate at which the market benefited from the elections varied but still brought on, an upward trend. The stock markets are very volatile so it cannot be said, for sure, how much that they will grow or even if they will grow.

The Unpredictability of the Elections and the Market

But be it the elections or the stock markets, both are unpredictable. Which is why there are often pre-election jitters in the market the election year 2004 saw the peak of the stock market as well as the most downfall in a day, in the same year?

Overall Market Sentiment

After studying the past years’ trends, the overall market sentiment is positive. It is believed that irrespective of the jitters and changes to the Government, the market would continue to grow in 2019. It may have sudden dips but the general trend is expected to be upward. Ride the bull by investing in SIP, today.

SIP Investment

Investing for Short or Long Terms

Investing can be for a short term or for a long term. But where should you invest? Investing in the same place for short-term as well as long-term may not give you the desired results. Short term is more affected by the volatility of the market and has a greater chance in resulting in a loss.

If you are planning to invest in the debt and other fixed income securities, the rate of return is, as the name suggests, fixed. It will not increase with the increase in the share prices of the company or by the profits that the company may get. These profits will be reflected in the equity shares of the company, which is why investing in equity will help you get your hands on the profits. But there are different kinds of companies to invest in. Small cap, Midcap, Large cap are the various classifications of the shares of companies, based on market capitalization value. Another option is to invest across the market capitalization, i.e. in small caps, mid caps, large caps, and multi-caps. It is wise to have a diverse portfolio which includes all the various companies irrespective of their capital, based on their intrinsic value and future growth prospects. This will help you keep ahead of the fluctuations of the market.

A wise investor will always try to balance between chasing opportunities in equities with balancing them with the security of debt. This is exactly where balanced SIP funds come in. These types of SIP’s invest in both debt instruments and equities, giving you the chance to be safe and at the same time allow you to chase inflation-beating growth, in your financial investments.

Year 2018: Market Flashback

2018 was a year of too many fluctuations. Nifty and Sensex peaked at 11,738.50 points and 38,896.63 points respectively on the 28th of August and were the lowest at 9998.05 points and 32,596.64 points on 23rd of March. After only two months of peaking, on 26th October, both Sensex and Nifty lost 14% of their volume.

Given below are a few factors which led to market volatility in 2018

Crude Oil

It wasn’t a good year for crude oil. While crude oil had a good half a year with an upward trend between January to October, it crashed nearly 40% after October till December 31st because of the oversupply.

Urjit Patel’s resignation

Only a day before the election, on 10th of December, RBI Governor Urjit Patel announced his sudden resignation. It was followed by a 205 points loss in Nifty and a 713 points loss in Sensex.

How Did The Equity Market Fare?

The equity market had many ups and downs. The banking sector saw a fall in their values after the resignation of Urjit Patel. The core industries saw a very slow pace for growth because of fall in the supply of fertilizers and crude oil. As mentioned earlier, crude oil prices crashed. Indian Rupee crossed the 70 rupees mark in the year.

As compared to the equity market, the mutual funds fared much better. The mutual funds market maintained the uptrend for the whole year. Many new SIPs were added which gave way to a strong inflow of investors irrespective of the volatility in the market. It also saw a 13% increase in it’s ‘Asset Under Management’ or AUM’s as they are known. It is the volatility of the market that gave the mutual funds a greater scope of making profits by reading the trends properly.

Set Your Goals and Start Investing!

Setting a goal is an important decision when you invest. You need to know why you want the money, and when you want it. Do you want money to buy a holiday home or to seek an easy retirement? Your objectives and goals will affect your investments. Depending on your needs, go for short term or long term investment, or decide to take risks or play it safe. So set your goals and start investing in SIPs right away!

Why SIP?

To invest in the market and get a profit out of it needs a huge effort on the part of the investor. You need to create a portfolio, track the changes, invest and sell at the correct time, read the trends and much more. For a person who has no experience in it, it takes a huge risk going into it. And the profit is never certain. To avoid the hassles and still reap the benefits of the upward trend in the market, without investing a lump sum amount, SIP is the way to go. SIPs or Systematic Investment Plans are plans where an individual invests only a small amount at certain intervals and that amount is then collected by the mutual fund companies and added to the amount invested by other SIP holders and then invested into the stock market. How does it help you? Suppose there’s a company whose share prices are expected to increase at a rate of 10% every month, but the price of the lot is more than you can afford, so what do you do? Skip out on the opportunity? SIP helps you here; you invest only the amount you have and with the collected amount of other small investors like you, you get the chance to invest in the company. Mutual funds have experts in their team who can read the trends much better than you. It is their job after all.

Mutual Funds Are Much More Transparent

This past year, SEBI has brought on much more transparency. You are investing your hard earned money with them. So you should be able to know how it is being used. The investors can check their money at any time through the various means provided by the mutual fund companies. The best option is to check your portfolio online through the website or the app of the mutual fund company, you have invested with.

Mukesh Gupta

Wealthcare has been promoted by Mr. Mukesh Gupta who is a Fellow Chartered Accountant (FCA), Certified Financial Planner (CFP) and Certified Public Financial Planner. He has over 22-years experience in the Wealth management industry. He previously worked with Birla Sunlife Group. He occasionally writes for newspapers and appears on television for matters related to personal finance and Wealth management.

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