prpri SIPs & Investment strategy during market volatility & Plight -Way to deal with it SIPs & Investment strategy during market volatility & Plight -Way to deal with it

Getting battle ready for post covid 19 world is the real test of time and could rack one brain to extreme unseen possibilities of life as nothing is going to remain same as earlier. Series of changes will be witnessed including the life style changes, changes in standard of living, changes in government policies, company policies, market behaviour, market volatility, investment strategies and so on.

Its the time to rethink your investment strategies and reconsider the portfolio and avoid unrealistic return assumptions as no one can predict the exact market behaviour hereon. Getting back to the basics if you have any running SIPs and thinking to pause or redeem it, wait lets first try answering few questions:

1. What was your purpose of making the sip?

2. Was it to time the market ?

3. Was it to make short term strategic decisions?

4. Or was it to save and accumulate wealth over the period of time?

If the reason for making the SIP is to build a wealth for your desired goal for you and your family, then you have every reason to cherish since the cost of purchase per unit is lower now and with every investment in SIP you are getting more units and thereby leveraging the effect of sinking market to your advantage.

FAQ on Running SIPs?

Q 1. Should I stop or Pause my SIP ?   

Ans: If the answer to above four question is favourable, there is no need to stop the SIP. Think to cut the expenses of other heads and continue running your SIPs, provided the Fund and category is wisely selected.

Q 2. Should I reduce my SIP Amount?

Ans: NO, instead of reducing the SIP try cost cutting in other expenses as much as possible

Q 3. How long should I continue my SIPs?

Ans: Continue running the SIPs for same period or more as you decided while opting for initial  SIP purchase.

Q 4. Should I reshuffle my portfolio ?

Ans: If initial funds are properly and wisely selected  under proper expert advice, there is no need to panic and experiment during this plinth. Simultaneously advisable to keep a close eyes on the funds recovery pattern over the period of time. Any abnormality in your funds return recovery period compared to similar market funds you may think for reshuffle at later stage with proper advice.

Q 5. Can I invest on the basis of Past return history?

Ans: “No”, Past return history cannot be the basis of future investment. Past returns always comes with available market factors during that period. such market factors includes – inflation, government policies, Market situations , Global market, industry base , climatic conditions, natural calamities and my more. This will never be same as we are affected by pandemic.

Analysis of past market crash history:

  • Crash of 1992 ( largest fall in the history due to Harshad Mehta scam
  • Crash in 2000 due to dotcom bubble and south east asian crisis
  • Crash of 2006 & 2007
  • Crash of 2008 ( BSE fell by 1408 points, leading to one of the largest erosion of investors weath) banking industries led recession.

History suggests that market stages a smart recovery after every deep sink. And after the global crisis of 2008, the equity market has raised and shown a multifarious growth. And the long term investors have gained the most out of it. SIPs work best when the markets are volatile. If you stop SIPs when the markets are down, you miss out on lowering your total investment cost. And if you increase your SIP amounts when the markets are on the rise, you keep averaging your overall cost upwards


Do remember “Discipline is the bridge between goal and accomplishment”. So rule your mind and follow discipline in investment as SIPs are all about discipline”

Author Bio

Qualification: CA in Practice
Location: PUNE, Maharashtra, India
Member Since: 30 May 2020 | Total Posts: 4
CA. Jatin Rathor is the founder and in-charge of the Firm. He has an all round experience of more than 15+ years in the field of Statutory Audits, Taxation, Management Consultancy, Internal Audits & Systems Study, Tax Audits and Project Financing.The CA firm of Jatin Rathor & Associates enjo View Full Profile

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July 2021