SIP: The stock market is currently unstable. Foreign investors are withdrawing their investments from the Indian stock market in large quantities, due to which investors have lost lakhs of crores of rupees in the stock market in a few days. In such a situation, an atmosphere of fear has been created among small investors. Due to this, information is coming out that many small investors have closed their SIP (Systematic Investment Plan).
Why does Warren Buffett say that when investors are afraid to invest, you should invest.
The Nifty and Sensex are currently fluctuating greatly in the stock market. And when the stock market falls significantly, small investors are afraid. And in such a situation, small investors start making some wrong decisions. That is, closing your SIP (Systematic Investment Plan) or stopping your annual investment in Nifty and Sensex indices may seem safe. But it is very dangerous for your financial situation.
Why not stop SIP?
SIP (Systematic Investment Plan) is designed for the benefit of investors during the fluctuations in the stock market. When we continue buying SIP at a low level in the stock market, we get more units than our average monthly investment amount. Because at that time the NAV (Net Asset Value) is low. And when the stock market starts increasing, we make a huge profit on these additional units purchased.
Why is it important to continue SIP?
In the past few years in the stock market, it has been seen that in the last twenty years, there have been many times when the Nifty 50 index of the National Stock Exchange fell by more than ten percent. And after that, the Nifty 50 index has given a return of more than ten percent in a year on the same number of occasions. And importantly, the Nifty 50 index has given a return of more than twenty percent on five occasions. And whenever the stock market fell by more than ten percent and if we had continued the SIP (Systematic Investment Plan) investment, we would have got a very high return.
How long have you been in the stock market in the past few years?
The stock market fell by 11 percent in April 2005, and the market has given a return of 82 percent in April 2006.
The stock market fell by 13 percent in May 2006, and the market returned 30 percent in May 2007.
The stock market fell by 11 percent in August 2007, and the market returned 8 percent in August 2008.
The stock market fell by 35 percent in September 2008, and the market returned 20 percent in September 2009.
The stock market fell by 27 percent in November 2009, and the market returned 35 percent in November 2010.
The stock market fell by 10 percent in January 2011, and the market returned 14 percent in January 2012.
The stock market fell by 11 percent in June 2013, and the market returned 36 percent in June 2014.
The stock market fell by 10 percent in November 2016, and the market returned 27 percent in November 2017.
The stock market fell by 10 percent in August 2019, and the market returned 20 percent in August 2020.
The stock market fell by 10 percent in December 2021, and the market returned 11 percent in December 2022.
What does Warren Buffett say?
We have seen the data of the last few years in the stock market. This data reminds us of the famous mind of Warren Buffett, the biggest investor in the stock market. In which Warren Buffett says that when investors are afraid to invest in the stock market, we should invest in the stock market and when the stock market is at its highest level, we should stop investing.
What will be the loss due to closing the SIP?
By closing the SIP in the stock market, the investor loses time to buy shares that are available at a low price. And when the stock market is at a low level, by exiting the market, his losses increase significantly. Due to this, when the stock market increases, the investor cannot earn profits.
What to do when the stock market is fluctuating?
Although the stock market is fluctuating, if you are a long-term investor, it is a good opportunity for you to reassess your portfolio. You can use this opportunity to evaluate whether your current investment is in line with the risk capacity you are taking. In the stock market, when the market is at its highest level, we see other investors buying and we invest in the stock market. But those investors may have different risk tolerance and time horizons in the stock market. You have to build your portfolio properly to meet your goals, risks and needs in the market. And when the stock market is going up and down, you have to look at it as a great opportunity for the future.
Disclaimer: The information written in this article is for educational purposes only. If you want to invest in the stock market, you should learn about the stock market yourself or take advice from a financial advisor and certified expert. The stock market is subject to risk. Before making any investment, you must take expert advice.
Conclusion
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