How many times do I hear this question. Most of the people asking this question are the ones who started a SIP because they had some surplus.

Let me explain. I met a young girl working in a bank (selling ULIP and SIP) – and she had 14 sip running. None of the SIP had any purpose and many of them were for Rs. 1000 – and some were for Rs. 3000. Totally she was doing about Rs. 30,000 per month of SIP in a plethora of funds. She had sip running in Hdfc, Franklin Templeton, Icici Prudential, Kotak, Motilal Oswal, Reliance, Birla, LnT, and Mirae. I may have even missed one or two…but that is beside the point.

So this is how the conversation went:

Sir Market is falling, should I stop the SIP?

Me: How do YOU know that the market is falling (present continuous)?

She: Sir I am sure you are pulling my leg…see the paper, see TV…MARKET IS FALLING, is it not?

Me: Actually I can tell you that the market fell yesterday by 200 points, but I have no clue what it will do tomorrow. I can say it fell, but I cannot say “it is falling”.

She: Same thing sir…please tell me should I stop the SIP? Mine is hard earned money and I am not exactly rich.

Me: Do you know why you started these 14 sip?

She: NO sir. I just know that in the past 9 years whenever I had an increment I would start a sip. Earlier I used to get small increments, but now I am able to start sip of 3k…hence you see my newer sip are for higher amounts.

Me: You have 3 mid cap funds, 2 multi cap funds, 5 large cap funds, 1 small cap fund, and 3 balanced funds.

She: sir I would see the ratings and start the sip…but did not bother if the ratings fell later on. Also all my sip are for creating long term wealth, and I do not even see the ratings after I start the sip. All of the new sip are perpetual…but some of the older ones are for 5 years.

My take:

Look for a 23 year old to start a sip was great. You deserve a pat on the back for doing that. This is all the more creditable that you have repaid your educational loan and you are part paying the EMI for your family car. Not too many kids pay for family assets at such a young age.  Girl, you do me proud.

However, keep reading this blog and see how can you improve. First of all put your portfolio in www.valueresearchonline.com or www.moneycontrol.com and you will be able to analyze your portfolio. Look for an adviser who will help you, or learn more about equity, etc. I love the fact that you have not touched any sip – and your oldest sip – started 8 years ago has a good accumulation. You are a great saver – the %age of amount saved is really awesome. Not too many 29 year old have accumulation of a few million rupees.

Now is the time to read our book “Goal based Investing” – and set up goals and specific plans for each of the goals. ASSUMING you have no goals, it means your goal is wealth creation¬† / retirement. Once you have a goal – say 2- Retirement, and you realize that you could live till 110 years and you need Rs. 22 crores for it, you will do a sip. Say you started a Rs. 5000 sip in Reliance Retirement Fund. You made it a perpetual sip with 10% annual step up. In say 2024 the market falls by 5% in 1 month. You again wonder what to do. Look at your statement…It will show the amount accumulated as Rs. 560,000. YOU WILL NOT ASK THIS QUESTION – your journey will be over only when you reach Rs.22 crores!

You have done a great job so far. Now is the time to consolidate – come down to 3/4 schemes (max) and for your debt investing use your PPF – it is already 5 years old.

Hey girl you can meet Warren Buffett and tell him “Sir, I listened to you”. I have NEVER lost money in my investments (my returns are Real returns), and I have grown my money, with little risk. Believe me, not to may investment professionals have done such a good job of what you have done. Great way to go!

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