Market volatility can have a huge impact on your investments in the short-term. During the 2020 Covid debut, the pandemic-induced volatility threw the markets into chaos and confusion for a few months. Unsure about the future, many investors got into panic-mode and sold their investments, while others saw it as an opportunity and started purchasing more. Eventually, the markets recovered, and some investors gained huge profits while others had to accept losses.
Now with respect to investing in SIPs, you invest a fixed amount at regular intervals. So when the markets fall, you still buy more units for the same amount, than when they’re high.
Actionable tip: Continue with your mutual fund SIPs even during adversaries. With every market fall, your SIPs will benefit from Rupee Cost Averaging (RCA) which will lower your acquisition cost. Rather than getting scared of market volatility, make it your friend and benefit from it. In the long run, the market bounces back after uncertain times and makes new highs as it has always done in the past. Kick-start your monthly SIP journey with Niyo Money.
Now tell us, which type were you?
- I freaked out when the markets crashed and withdrew all my invested money
- I bought some more units for cheap when the markets crashed and continued investing