What will you do if the money invested in SIP is lost, understand here the way to avoid it…

Systematic Investment Plan (SIP), today, has become one of the best options for people from investment or retirement to future planning. But have you ever thought that what will you do if SIP does not give the desired returns or your money invested in SIP gets lost? If this happens then what is the way to prevent it?

SIP Calculation Based on the Past A fixed formula for correcting any kind of calculation or speculation is to place the scope of its correctness far in the future, so that when it comes time to verify it, you do not even remember the calculation. Well, similar is the case with SIP; Whatever future calculation you get today in SIP, you do it on the basis of the records of the last 20 years. For example, in SIP you are told what is the average return of the stock market for the last 20 years, based on this the future calculation is done. Prediction is made. But sometimes it may happen that in future the market may not perform the way it has done before.

It is also possible that your SIP is investing in a cycle when the market conditions are not proper. Or it is also possible that the market conditions may not be favorable at the time you need to withdraw money from SIP. Then will your SIP work? According to a news from ET, when you see 5 consecutive bad years in the stock market. When you see your investments falling, it also has a psychological effect on you. In such a situation, SIP does not appear to be as good an option as it appears to be, calculated on the basis of the data of the last 20 years.

It is not easy to know the future, especially in equities. When does your SIP money not work? If you want your SIP to give the right results as per your calculations, then you have to understand that there will be inflation in the next 20-25 years. Apart from this, what problems will your investment have to face? What matters more than giving the desired result of SIP is what is the movement of the market. Keep in mind, any SIP scheme is good only when the shares bought expensively in the bull phase are bought and more shares are bought in the declining phase of the market. The purchases are averaged.

A basic principle works in SIP, that is to build the corpus for the first 10 years, grow the corpus money for the next 10 years and then withdraw. If the market does not support you at any one of these points in the future, then your SIP will not give the desired results. What are the measures to prevent this? If you want your investment to support you in the future, then the biggest lesson is this. That you should diversify your portfolio. For example, some of your money should be saved in equity, some in FD, some in bonds, some in real estate and some in gold. Not only this, if you are also investing in SIP, then you should have different types of funds, which will give a balance to your investment.

Post Views: 330