If you want to start a SIP but you're afraid of a market crash, it's important to first understand how SIPs work and how market volatility affects them. Once you know this, you'll be better equipped to decide whether starting a mutual fund SIP investment in Chennai is the right move for you.
How Does a SIP Work?
A Systematic Investment Plan (SIP) lets you invest a fixed amount regularly in a mutual fund scheme—usually every month. You don’t have to time the market. No matter if the market is high or low, your money is invested regularly.
When markets are down, your fixed amount buys more units of the fund. When markets rise, it buys fewer units. This process is called rupee cost averaging. Over time, it averages out the cost of your investments, reducing the impact of market ups and downs.
What Happens to SIPs in a Low Market?
A falling market may seem scary, but for SIP investors, it can be an opportunity. Here's why:
More units for the same price: When the market is low, NAV (Net Asset Value) of mutual funds drops. That means your SIP amount buys more units.
Higher returns when markets rise: Once the market recovers, the value of the units you bought at lower prices increases, potentially giving you better long-term returns.
In simple words, SIPs help you buy low and benefit later when the market goes up.
Should You Start SIPs in a Low Market?
Yes. In fact, starting a SIP through a mutual fund distributor in Chennai, like Fairmoves, in a low market is often a wise decision.
Here’s why:
1. You Don’t Need to Time the Market
Timing the market is hard—even for experts. SIPs remove this worry. You just invest regularly, whether the market is high or low.
2. Takes Advantage of Market Volatility
A low market allows you to accumulate more units. When the market rebounds, your investment grows faster because you hold more units.
3. Disciplined, Long-Term Investing
SIPs encourage consistent investing. You stay on track with your financial goals instead of reacting emotionally to market movements.
4. Power of Compounding
The longer you stay invested for, the more you can benefit from compounding. Even small monthly amounts can grow into significant wealth over time.
Conclusion
So, can you start an SIP during a low market? Yes, you can—and you should. A low market is not a reason to delay your investment; it's actually an opportunity. SIPs are designed to help you invest without the stress of market timing. They allow you to benefit from market corrections while staying focused on long-term goals.