No this is not an appropriate title…just a controversial one….

I was wondering what to title this article….decided on this one. Well in the ‘electronic age’ there seems to be a disconnect between the body of the article and the title.

Let me explain. Vidya Bala is a very sharp journalist who works with Hindu Business Line and she has done a story saying how ‘SIP returns over the past 3 years – 2008 to 2011 Jan – has returned DOUBLE the returns of lump sum investing!

Now this SIP vs. Lumpsum is such a difficult to do story – I can do ‘sip does not work’, ‘sip loses money’ , ‘sip gives double return’ …..ONLY the dates have to be tampered with!

If a person has a networth of say Rs. 5 crores…and he wants to invest Rs. 30 lakhs for a 10 year period, and has been doing SIPs for the past 10 years….I AM HAPPY HIM DOING A LUMPSUM…however if it is a person with a networth of say Rs. 1 crore and he has Rs. 50 lakhs to invest, I ask him to do a STP of Rs. 8L over 6 months. In case it is a person with a networth of Rs. 1 crore, and wants to invest Rs. 1 crore, then I make him do a SIP of Rs. 4 lakhs over 2 years.

So there is no ‘SIP works’ or ‘SIP does not work’ story….however once in a while we can do such stories. Let me add Vidya’s article is a very well done one and she says ..’because it was a particularly volatile period…..’

Now since we earn monthly, spend monthly let us invest monthly. If you are 23 and need Rs. 10 crores for retirement, of what use is ‘gyan’ that if you invest Rs. 2.8 crores it will become Rs. 10 crores…? You do not have Rs. 2.8 crores, do you?

If I tell you if you start with a Rs. 10,000 SIP, …then keep increasing…you can have your corpus….that makes far more sense does it not?

read on…here is Vidya’s article which appeared in Hindu Business Line..

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  1. subra,
    what is your take on VIPs (value IP).are they a gimmick or should they work as good as SIPs with better returns as many claim.
    i am not entirely conviced,but i did convert some of sips into vips

  2. As subra says, there is no ONE BEST Way to do SIPs. It all depends on the dates.

    Having said that, this is what I do. If I have Rs.100 to invest in SIPs over 12 months, I do SIPs only for Rs.80. Rest Rs.20 which I keep in liquid fund, I invest in lumpsum (ETFs better, Funds ok too) whenever market tanks 10% or more. Over a period of one year, usually at least one 10% tanking happens over market high (like now, Tue Feb 8). And I did invest my one dose of Rs.20 already over the past one week (with Sensex hovering around 18k). provides a way make this happen via their Flexi SIPs. But, you can do it manually too.

  3. Dear Sir

    Do you think, as NPR pointed out, that in a falling market such as the one we are facing now, it is a good idea to increase the SIP amount?

  4. the essence of indexing and SIP is NOT TO WORRY ABOUT short term fluctuations. Once say the market comes to 12000, there can be a theory..SIP amount should be 4 times…:-). If you have money for the long run, the earlier u put and longer u hold you will make money. With hindsight we can always use hindsight and come out with theories. NO GUARANTEE WHAT WILL WORK..

  5. Yes, what Subra said is correct. Hindsight is always easy. That’s what I also said, there is NO ONE BEST way to do SIP (in the beginning para).

    What I proposed is what I do. Its just a slight variation on SIP. No Guarantee it will work All times. In fact, no one can say that ANY method will work all times.

    Research and find out, whether there has been at least one 10% dip in Index levels for the past 10 years. If yes, probably it is something one can try. (However, market can go lower than 10% too)

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