Tips for a falling market: SIP

This headline is so contagious that everybody will want to know what is inside this! However, tips on which share to buy does not create wealth. So if you were expecting me to say “Buy Hindalco, Tata steel, Tata Motors, etc. you will be disappointed. Sorry!

Here are some tips however, on how to behave in a falling market. Well you need to remember the following:

1. Why did you do your SIP: Most SIPs are done to meet some target – child’s education, own retirement, etc. so if that goal is intact keep paying your SIP amounts. One big advantage of an SIP is it allows your investment to be free of emotion (emotions are perhaps your worst enemy, not market behavior). So keep your SIPs going.

2. Failing to follow through your ideas cost you more: People promise themselves that they will buy when the market falls – but when it falls they keep waiting till eternity. Do not do that. Just let your SIPs run…do not panic, do not over do – in a bull market or a bear market.

3. Do SIP in mutual fund portfolio NEVER IN A SINGLE SCRIP. If you were (are) doing SIP in Biocon, MindTree, Silverline, Crest Animation, ….you will be in the RED…and you may lack the conviction to do follow through purchases. This fear is increased when the media says “Breaking News….markets have fallen 7%….” etc.

4. A fund with a high beta is something most investment advisors avoid. However from a SIP POINT of view, the more volatile a fund, higher impact of Rupee Cost averaging.

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