Comments on: Advantages of Investing Through SIP http://ranjanvarma.com/advantages-of-investing-through-sip/ Learning and Sharing Things Around Money Thu, 29 Jul 2010 03:31:17 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Darvas Box http://ranjanvarma.com/advantages-of-investing-through-sip/comment-page-1/#comment-7318 Darvas Box Sat, 08 May 2010 20:11:32 +0000 http://ranjanvarma.com/advantages-of-investing-through-sip/#comment-7318 Man what a week for the markets! I have been trading for over 20 years and have never seen the market take a dive like this week. I hope the investigation shows what happened. Funny thing though, I thought there were circuit breakers that suspended trading for a bit to let the markets settle down after a large point drop. Man what a week for the markets! I have been trading for over 20 years and have never seen the market take a dive like this week. I hope the investigation shows what happened. Funny thing though, I thought there were circuit breakers that suspended trading for a bit to let the markets settle down after a large point drop.

]]> By: Xavier Paluk http://ranjanvarma.com/advantages-of-investing-through-sip/comment-page-1/#comment-6605 Xavier Paluk Wed, 31 Mar 2010 08:16:57 +0000 http://ranjanvarma.com/advantages-of-investing-through-sip/#comment-6605 interesting take on the subject, count me as a new subscriber! interesting take on the subject, count me as a new subscriber!

]]> By: Dinesh http://ranjanvarma.com/advantages-of-investing-through-sip/comment-page-1/#comment-5727 Dinesh Thu, 11 Feb 2010 15:59:37 +0000 http://ranjanvarma.com/advantages-of-investing-through-sip/#comment-5727 Well in Hein sight it should certainly allow a SIP investor will investment at intra month bottom and thus make money a will. I suppose in that case a lump sum investor should go short moment markets have peaked and thus earn double of what SIP investor does. What I have tried to do is for last three years hypothetically invest money in S&P 500 at the average level each month as follows; Starting point 1/29/2007 (S&P 500 1406.82), finish 1/29/2010 (S&P 500 1073.87) resulting in annualized loss of 8.6% for three years. SIP investment at monthly average investment of $ 100 each month and final value I had was 3406 resulting in average loss of 0.43% for three years. Looks like in a long term SIP investor could have much less loss in this period, however if we change a situation a bit and instead lump sum investor to invest more practically each year say by end of Jan for last three years we realize that this (lump sum) has lost only 10bps compared to SIP investors’ loss of 43bps. So the benefits of SIP investing really rests in disbursing the timing as you cant’ beat it and also to manage your liquidity but on a more practical approach there is no guarantee that SIP investor would beat a lump sum investor who loves investing once in a while. For superior returns a balanced and disciplined approach on portfolio allocation across assets is necessary. Here I would suggest a independent portfolio review from an expert or to have a Portfolio Manager at the first place is very important for a mid size retail investor. Well in Hein sight it should certainly allow a SIP investor will investment at intra month bottom and thus make money a will. I suppose in that case a lump sum investor should go short moment markets have peaked and thus earn double of what SIP investor does.

What I have tried to do is for last three years hypothetically invest money in S&P 500 at the average level each month as follows;

Starting point 1/29/2007 (S&P 500 1406.82), finish 1/29/2010 (S&P 500 1073.87) resulting in annualized loss of 8.6% for three years. SIP investment at monthly average investment of $ 100 each month and final value I had was 3406 resulting in average loss of 0.43% for three years. Looks like in a long term SIP investor could have much less loss in this period, however if we change a situation a bit and instead lump sum investor to invest more practically each year say by end of Jan for last three years we realize that this (lump sum) has lost only 10bps compared to SIP investors’ loss of 43bps.

So the benefits of SIP investing really rests in disbursing the timing as you cant’ beat it and also to manage your liquidity but on a more practical approach there is no guarantee that SIP investor would beat a lump sum investor who loves investing once in a while.

For superior returns a balanced and disciplined approach on portfolio allocation across assets is necessary.

Here I would suggest a independent portfolio review from an expert or to have a Portfolio Manager at the first place is very important for a mid size retail investor.

]]> By: srinivasu chennapragada http://ranjanvarma.com/advantages-of-investing-through-sip/comment-page-1/#comment-4945 srinivasu chennapragada Sun, 27 Dec 2009 15:40:40 +0000 http://ranjanvarma.com/advantages-of-investing-through-sip/#comment-4945 sir, true. wellsaid. sip is only to minimise the risk. thanks sir,
true.
wellsaid. sip is only to minimise the risk.
thanks

]]> By: AmitKher http://ranjanvarma.com/advantages-of-investing-through-sip/comment-page-1/#comment-4664 AmitKher Fri, 27 Nov 2009 17:45:23 +0000 http://ranjanvarma.com/advantages-of-investing-through-sip/#comment-4664 Very misleading example. There are more examples where lumpsum outperforms the SIP. You make it seem as that because SIP gives more returns that is why one should invest via SIP. This is wrong. The only thing SIP does is reduce risk (of investing at market peaks). Because of this, SIP can sometimes give much less returns than lumpsum. Very misleading example. There are more examples where lumpsum outperforms the SIP. You make it seem as that because SIP gives more returns that is why one should invest via SIP. This is wrong.

The only thing SIP does is reduce risk (of investing at market peaks). Because of this, SIP can sometimes give much less returns than lumpsum.

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