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Beat Demonetization through SIPs

We all are in a hunt for an opportunity. An opportunity to a better life style, a good job prospect, a better opportunity to make money etc. We want to make the best of every opportunity. How wonderful it would be if the opportunity comes knocking on our doors.

We as investors always look for some alternative to invest our money in. An alternative with a good opportunity. One such opportunity recently knocked our doors. Yes the DEMONITISATION step taken by our PM Modi. The 500 and 1000 rupees note were invalidated from 9th November 12 am. The value of the money held by the citizens in cash just became zero till the time they deposited in their bank account. The very next day there was blood bath on the exchange. The Sensex had fallen approximately 2000 points from 8th Nov to 21st Nov.

Markets had become volatile. Panic had poured into us. Not knowing whether to hold on to our investments or to let go. It created kind of a frenzied situation. As an investor into the equity markets our first reaction would be to sell our holdings and park it elsewhere.

Now theoretically, we are hardcore followers of the philosophy of buy at lows and sell at highs. But practically, we do just the opposite.

Yes demonetization would slow down the industry a bit. It would take some time for the circulation of money to get normal and the market to get stable.

But here lies the opportunity.

Here comes the superman of investments, Mutual funds. A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities.You need a lot of time and knowledge to decide what to buy or when to sell. A lot of people take a chance and speculate, some get lucky, most don t. This is where mutual funds come in. Mutual funds offer you the following advantages:

  1. Professional management
  2. Diversification
  3. Affordability
  4. Tax benefits
  5. Rupee-cost averaging
  6. Liquidity

There are two simple ways of investing into a mutual fund, one is by a lump sum amount and the other is by way of a SIP. In a SIP an investor doesn’t have to worry about timing the markets anymore. The investor would be investing a certain amount every month in a particular scheme of the mutual fund and the scheme would then invest that money in a basket of stocks it has chosen. This offers the benefit of diversification by not investing all your money in one particular stock but in several stocks.

SIP is the best solution in times of a volatile market as you would be buying at highs as well as the lows and at the end of your investment period you would have averaged out your invest cost and benefiting from the power of compounding. The power of compounding works best as you stay invested helping your money earn money over the years. After all, it is the time in the market and not timing the market that helps you create wealth for your dreams in life. So, dream more and achieve much more. Start investing through a SIP today and work towards achieving your dreams.

SIP your way through Demonetization and take full advantage of the opportunity. So just sit back and let your money do your work for you. Don’t just curse but learn to nurse Demonetization. Be an opportunist.

The article has been written by Abhishek Roychowdhury. For Sound Wealth Management Advice, connect with us at info@buckscontrol.com or call us at 022 40039898. Know more about us by visiting us at buckscontrol.com

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