MUTUAL FUND INVESTMENT | Strategy to beat market volatility; enhance returns through trigger SIPs
Trigger systematic investment plans (SIPs) allow individuals to adopt a tactical approach to investing. Such a strategy helps investors to enhance their SIP returns and reduce risks during market volatility. By setting triggers based on market conditions, such as specific price levels of the benchmark, investors can capitalise on the market opportunities and take advantage of market volatility.
Trigger SIPs enable investors to buy more units when prices are lower and fewer units when prices are higher, optimising their average purchase price over time. These offer the benefits of automation and discipline, similar to traditional SIPs. Investors can continue to invest at regular intervals without the need for constant monitoring, ensuring a consistent approach to wealth accumulation over the long-term.
Nirav Karkera, head, Research, Fisdom, says investors can set triggers to invest only when the market falls by a certain percentage, which acts as a safeguard against investing at elevated market levels. “This helps mitigate the risk of buying into overvalued assets and experiencing potential losses during market downturns,” he says.
Triggers can be set based on the analysis of the investors. This can help them in investing at lower rates whenever there is some kind of consolidation in the market. Harshad Chetanwala, co-founder, MyWealthGrowth.com, says investing with the help of triggers requires more information about the factors that can have an impact on the stock market. “As the triggers are based on price or time, having a reasonable understanding of market conditions and analysis of the market is important,” he says.
Investors should consider price triggers for capitalising on short-term market fluctuation and
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