Does rupee cost averaging really work for SIP beyond a point? Rethink your strategy

economictimes.indiatimes.com:

rupee cost averaging are powerful tools that work in our favour. They promise a disciplined approach to investing, regardless of market conditions. However, as your accumulated amount grows, it's time to reevaluate whether rupee cost averaging continues to be effective in maximizing returns. In this article, we unravel the truth and urge you to rethink your SIP strategy.Understanding Rupee Cost Averaging: Rupee cost averaging, a cornerstone of SIPs, is designed to average out the cost of investments over time. By investing a fixed amount at regular intervals, regardless of market fluctuations, it aims to mitigate the risk of making significant investments at unfavourable peaks. The concept is appealing and has proven successful for investors with smaller portfolios.The Question of Effectiveness with Accumulated Amounts:As your investment portfolio expands, it becomes crucial to critically examine the effectiveness of rupee cost averaging. Here's why it might fall short:

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Diluted impact on larger portfolios: As your accumulated amount grows, the impact of regular SIP contributions on your overall portfolio diminishes. Rupee cost averaging is most powerful when investment amounts are substantial compared to the portfolio size. It becomes essential to reassess the strategy's effectiveness in light of this.Let's understand this through a case study:Ravi has been investing Rs 10,000 per month via SIP in Nifty 50 for a long time, and as of Jan 2008, the current value of his portfolio is 10 Lacs. Whereas Raj has just started investing in the same scheme Nifty 50 via SIP with a monthly contribution of Rs 10,000 from Jan 2008. Let's analyze their returns from