Investing in 2024: Why you should continue to prefer SIP mode of investing

economictimes.indiatimes.com:

But a key development that almost grabbed the attention of the street has been the huge acceptance of the Systematic Investment Plan (SIP) mode of investing. This is reflected in the inflows through SIP mode, which reached Rs 17,073 crore in November 2023 from Rs 13,306 crore in November 2022. This amounts to a growth of 28% on a year-on-year comparison.

A noteworthy development contains an interesting story.

Systematic Investment Plans (SIPs) in equity funds are primarily used by individual investors who plan to invest regularly. Statistics give a clear picture of the popularity of SIPs. The monthly SIP contribution recorded for November 2023 was at Rs 17,023 crore compared to Rs 11,005 crore two years ago.

This money was routed through 7.44 crore SIP accounts as of November 2023 compared to 4.78 crore on November 2021. A substantial part of the money invested through SIP goes into equity schemes or hybrid schemes with relatively higher allocation to stocks.

Many investors prefer the SIP mode of investing because it is simple to understand and execute. An investor can allocate money according to his capacity.

One can start a monthly SIP with a small amount, say Rs 100 per month. The big advantage for an investor is it helps to minimise the negative impact of volatility. For retail investors it may be unnerving to invest in equity funds all their money at one go and then watch the markets oscillate.

Instead, SIP puts them at an advantage by helping them buy more when chips are down. Corrections are inevitable in the stock markets. Most investors cannot avoid them.