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Do you know what happens if an investor pauses his SIPs due to market volatility?
An analysis done by Mirae Asset MF shows that investors can lose close to Rs.19 lakh if they pause their 15-year-long SIP of Rs.10,000 for 39 months due to market volatility.
The analysis shows that an investor would make Rs.61.33 lakh in a large cap fund if he continues his SIP of Rs.10,000 for 15 years.
However, if he chooses to pause his SIPs for 39 months during extreme market volatility i.e. between April 08 and May 09 (14 months due to global financial crisis), September 15-June 16 (10 months due to world wide slowdown during Yuan devaluation and banks NPA fear), February 20-Oct 20 (9 months during Covid 19) and March 22 to August 22 (6 months during Covid 19 and Ukraine Russia crisis), his investment value would be Rs.42.72 lakh as on March 2023.
While the investor did not invest Rs.3.90 lakh due to volatility, the overall difference in investment portfolio is close to Rs.19 lakh, shows the analysis.
Investors usually avoid participating in volatile market due to herd mentality, said the fund house. It said, “Just by missing 39 SIPs of Rs.10,000 in 15 years during the mentioned market crises, could have cost investor Rs.18.60 lakh.”
