Pausing SIP in Rising Market
Ninad Ramdasi / 11 Jan 2024/ Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Letters to Editor, MF - Letter to Editor, Mutual Fund
Regarding your article in the last edition, should I consider stopping my SIP in a rising market? What are the repercussions? - Vinod Kutty [EasyDNNnews:PaidContentStart]
Editor Responds : Thank you for writing. When the market is rising, you may be buying more units of your mutual fund at higher prices. This can increase your average cost per unit (ACU) and potentially lower your overall returns. Stopping your SIP temporarily can allow you to wait for a correction in the market before re-entering at a lower price point. However, even if the market is rising, continuing your SIP allows you to benefit from the power of compounding. Over the long term, this can significantly boost your returns. Your investment goals should be your primary guide when making investment decisions. If your goals are long-term, such as retirement, then stopping your SIP in a rising market may not be the best course of action.
Ultimately, the decision of whether or not to stop your SIP is a personal one. There is no right or wrong answer, and the best course of action will vary depending on your individual circumstances. If you are unsure what to do, it is always a good idea to consult with a financial advisor.
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