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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