In A Bull Market Choose An SIP
The SIP or the systematic investment plans help the investor to spread out his risks. This is because he invests in regular intervals and he thus does not have to worry about the market direction. The market does not move in a straight line and thus the investor when invests through a SIP gets to enter into the mutual fund scheme when the market is at its peak as well as when the market is at its lows. This is known as cost averaging and the investor is able to benefit from it.
The SIP is the best way to enter the market in a bull phase. In a bull market always stay away from investing a lump sum money in the market.
Timing the exact low is impossible
One can never know when the bear market would end and the trend change would happen. This is even true when you trade through the automated trading robot. When the market is in a bear phase no one has the guts to enter the market at that time. The market trend changes and starts to rally immediately. Thus it is impossible that one can exactly time the market.
Most of them who look to invest in the mutual fund schemes watch all through the bear phase of the market and wait until the trend reverse. This gets late and the market then moves up so fast that one does not get a good entry price.
This is why SIP’s are your best bet. The SIP investment does not force you to take a decision and you thus do not take a wrong investment decision in haste. You just keep buying the units of the mutual fund scheme in an uptrend and downward moving the market and this, in turn, averages out your investments.
The equity market never moves in a straight line and thus investing through a SIP averages out the costs.
SIP is the best way to invest in mutual funds
The benefits of investing through aSIP are:
- You do not have to time the market
- You benefit from rupee cost averaging
- You make some disciplined investments
- It lets you invest without having a large sum of money
The market gives you two choices to invest in the mutual fund schemes. Either choose a lump sum payment or opt for a SIP. SIP is the best for those who are just starting out to invest in the market or are not sure about how to invest in the market. This is a brainer. Just keep on buying the units each month and average out the purchase costs. Be it a bull ora bear phase in the market, it does not bother you.