You keep hearing that the SIP investments have gone nowhere in the last 5 years. Our lovely press also scares you into saying “the sip of the last 5 years has yielded less than PPF”. True.

This, however, is the best news for people who are accumulating investments on a SIPĀ  basis. For longer periods when the market goes nowhere, you should be just adding more money into your investing portfolio. This is the essence of the accumulation phase. It is amazing to see the tenacity of the Indian investing community which is INCREASING the SIP contribution to the mutual fund industry. ULIP and other endowment insurance sales is also INCREASING at 24% p.a. Assuming that the youngsters are contributing more to both of these sales it is amazing good news for the country. Yes, we have only touched a tip of the potential, but Rs. 8-9000 Crores a month is not a small amount of money. Only when this dries down dramatically you need to worry about a recession.

The yield curve has inverted in the USA, but in India people do want to borrow anyway so the yield curve is not inverted. Inverted yield curve is nothing to fear – it just means that people are willing to lend to longer term projects at a rate lower than the current. Well, at current interest rate scenario in the world (Bundes bond has negative yield)..such inversion should not matter too much to you.

 

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