A very good article no doubt and the conclusion that SIP is not great in bull market is also true. The main problem is one knows that the market was all along only bull AFTER the event.There is no way to predict that the market will remain ONLY in bull phase for over twelve months beforehand or even during that period. Secondly,it may be possible that even in this continuos bull phase there can be reactions or side ways movements and you may be lucky to have invested on these days through SIP. And thirdly,If one had the money to invest in the beginning!!
Another point in SIP is you can never be able to take out all the money that u have put in SIP at once.
For exampl : If I invest 5000 every month from Jan to Dec 2005. I can only take out 5000 in Jan 2006 without exit load.
This is never informed to the investor.Sometimes it is better to invest lumpsum amount at one go whenever the market is down.
SIP only makes sense in ELSS because money is locked for 3 years and hence lump sum dosent really make sense and we get tax rebate as well. For other means SIP is not so good idea. I started Fidelity SIP and since the IPO it is only going up so am not really making any money.I would have been in profit had I put more amount at one shot at the time of IPO. So I personally believe one should keep investing in SIP for ELSS and rest of the amount should put when the market is down or relatively down.
SIP is mainly for people who do not have a corpus but are willing to invest part of their salary/Income on a regular basis.You have to wait for one full Bear/Bull cycle to Compare returns through different Investment styles. Also presuming the author had invested the entire amount in the month of August what was the Guarantee then that the Market would have gone up immediately. Hindsight is always 20/20
I think that is not the way to look at SIP at all. What if the market had plunged further after Aug 2004. And, you say it is not a bad thing to time the market at all!!! How appalling. If you knew how to time the markets then why choose a mutual fund. Be your own fund manager.
SIP is for people who want to reduce the risks inherent in the market, a plan that will smoothen out the ups and downs. Not for someone who can TIME the market, my dear friend!
Your title suggested that you had a point to prove. But alas, at the end of the article you seem to agree with what you earlier disagreed!.... I really dont have clue as to what you're trying to prove, dont wrire crap just to get attention.... All mutual funds/banks that sell the SIP always tell investors that they should look at investing for atleast 3-5 years....
