I could have written a long article or just said…’I have said it so many times’…!

There is no great secret to investing in volatile times. Imagine the situation of a person who is doing a Recurring Deposit in a bank…does he/she think what are the interest rates prevailing?

No. He just does his RD.

Why does he invest/save?

Because he/she has money to invest they do a RD. However equity investors get into a mind set of ‘I will not do SIP’…and the reasons could be:

1. Market is too high or 2. Market is too low.

to me both reasons look stupid. Also for long term money to be kept in debt sounds funny…from a current yield/ ytm point of view. Yes if it is money for 2-4 years, can still understand debt option, or treating it as a corpus for annuity withdrawal….not if it is money for 30 year goals!

So simply do your SIP…at some time in the future you will look back and say “Man in 2011 the markets were at 17000, it was a great time to be picking stocks, now the index is 34000’. And it may not be more than 5 years away :-).

Remember markets gave an outstanding run from 3k to 21k in 5 years..the excess has to soaked up so that the  markets can do a ‘Regression to the Mean’. This means if you take the returns from Indian equity markets from 2002 to 2032 it may show an average of say 16%p.a. So obviously the 2002 to 2007 super high returns will have to be reduced..so that the average catches up! As a common investor we have no clue whether this grind will take the sensex to 15k and then come back to 21k or go down to 12k and then bounce to 25k. Well I do not know, and those who know are not telling me. Nor are they telling you on the TV channels, so it is a secret which only Mr. Market knows.

So what can you do in the interim period? Stop worrying about negative interest rates (interest rates 10%, inflation 12%), slow grinding up / grinding down equity markets, volatile markets, falling dividends, poor Q3 results….and continue your SIP. For the common man it works.

Anil Rego (SIP article on Moneycontrol) and Sandeep Shanbag (Investing in volatile times article on Moneycontrol) are saying similar things.

Funny thing is all of us must have said similar things earlier also…please go out there and listen. You do not need to read so much about personal finance – doing it is far, far more important. So like Nike says

Just Do it.

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  1. Excellent Subra.. Totally Agree..

    Few days back there was a program on CNBC in which few technical experts gave the details about how ppl were panicked during 2008.. ppl loved L&T to buy at 4200 but when same reached at 1400-1500, noone dared to buy that..

    If I like a share and I am confident about it, I’ll buy.. whatever price it have presently..

  2. One more thing Subra about SIPs..
    Many ppl suggest to switch between SIPs.. like if I am having an SIP of X MF fund..but it gave me only 12% return for last 3 years as compared to other 3-4 SIP MF Funds which gave, say 18-19%.. Should I stop that existing SIP and start new SIP for the good performer MFs?

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