1. Gr8 post. All the myths are covered. SIP if properly used can be a good regular saving tool.

    Surprise to see people have Myth No. 3 about no lump sum investment allowed in SIP. Highlights the lack of financial knowledge among investors.

  2. Myth4: Even though MF’s dont prosecute you, banks treat that missed month(due to non-availability of funds) as a bounced cheque and charge you a fine. This is quite ridiculous and MF’s should work with banks and do something about it. I do not know if there is a way to give advance notice to MF to not to take money from my account for that particular month/period.

  3. Sir I recently came across one more myth, though it doesn’t really applies to SIP but MF in general.In less then one month, more then 3 people asked me what all MFs I use and when I told HDFC Top 200 and reliance vision as part of my portfolio, they were shocked saying “its NAV is so high, do you think it can go higher?”. I tried explaining them chances of these funds giving me profit is much more then any new mutual fund with less NAV plus I am investing in them for almost 3 years now and I am happy.

  4. Myth No.2. Equity SIP will not work here. Some of the brokerages like ICICI direct has come up with this concept.

    Agree with Myth No. 8. Have experience myself.

  5. personally in our family there are SIPs running for 10 years plus. Have no particular objective for any of these funds..so it is a kind of ‘objectless SIPs’. Also it is possible that some have ended, i have not started it for 2-3 months, then started again. Whenever i need money or feel the need for money, I may remove the money..otherwise it just lies there. Once in a while i look at the returns – and my satisfaction threshold is LOW..i just go back. No action based on Q returns, M returns or even annual returns. No complaints so far on this ‘as long as the fund manager does not change i can stick to a good fund theory

  6. Sirji,

    What’s your take on the flavoured SIPs, e.g. flex STP – automatically investing more during down markets??

    BTW, I am become addicted to your blog and they are well written, informative…! Kudos..!!

    Best Regards,

  7. Subra Sir,

    Very good and informative article.
    I have been doing SIP for the last 3 years and have earned very good returns so far.

    Rakesh

  8. another valuable information about SIP from you. thanks!

    sir,
    sorry but I could not understand myth no. 5 completely.
    you said, “You should sell an equity fund on some other basis – say deciding to sell 20% of your portfolio in a year that the return is 4 times the 30 year historic return.”
    didn’t get it correctly. do u mean if the 30 year historic return is 12% then I should sell part of portfolio(say 20%) when the return is 48%(12% X 4) ?
    and why SWP can not work with equity?

    please guide

  9. souldnt point 9 differenctiate between an ELSS and a regular SIP. While ELSS has a 3 year lock-in. the regular SIPs are treated like equity holdings and are treated as long term capital gain, if held for one year.

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