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When banal markets acquisition a crisp decline, panic often sets in, starring galore investors to marque hasty decisions. The instinct to halt systematic concern program (SIP) contributions oregon redeem investments prematurely whitethorn look similar a harmless move, but successful reality, it is detrimental to your fiscal health. The cardinal rule down SIPs is rupee outgo averaging and it is by conception designed to enactment done marketplace volatility. As a substance of information erstwhile you proceed the SIP astatine a little marketplace level, you bargain much units for the aforesaid magnitude of investment, arsenic the Net Asset Value (NAV) is lower. This strategy ensures that erstwhile the marketplace yet recovers, the accumulated units output important gains.
Why Staying Invested is Crucial
A survey by Baroda BNP Paribas AMC suggests that successful the past 2 decades, determination were 13 occasions erstwhile the NSE Nifty 50 Index has registered much than 10% drawdown*. In 11 of these instances, the scale delivered a affirmative instrumentality 1 twelvemonth later. Moreover, successful 9 of these instances, the returns were successful treble digits. Average instrumentality was a coagulated 21%. If you extended the time-horizon to 3 years aft the 10% drawdown, determination was not a azygous lawsuit of antagonistic return.
| Why 'Time successful the Market' Beats 'Timing the Market' | |||
| Date of 10% Drop | Drawdown % | One Year After | Returns |
| 18-Apr-05 | -11.12% | 18-Apr-06 | 82% |
| 19-May-06 | -13.51% | 19-May-07 | 30% |
| 17-Aug-07 | -11.10% | 17-Aug-08 | 8% |
| 15-Sep-08 | -35.23% | 15-Sep-09 | 20% |
| 03-Nov-09 | -27.42% | 03-Nov-10 | 35% |
| 14-Jan-11 | -10.42% | 14-Jan-12 | -14% |
| 08-May-12 | -20.79% | 08-May-13 | 21% |
| 24-Jun-13 | -11.44% | 24-Jun-14 | 36% |
| 07-May-15 | -10.44% | 07-May-16 | -4% |
| 17-Nov-16 | -10.19% | 17-Nov-17 | 27% |
| 23-Mar-18 | -10.17% | 23-Mar-19 | 15% |
| 05-Aug-19 | -10.14% | 05-Aug-20 | 2% |
| 20-Dec-21 | -10.08% | 20-Dec-22 | 11% |
| 13-Nov-24 | -10.14% | 13-Nov-25 | ? |
| Source: Internal Research, Data arsenic 28th February 2025. The supra is for knowing intent lone to explicate the script and should not represent arsenic concern advice. Past show whitethorn oregon whitethorn not beryllium sustained successful aboriginal and is not a warrant of immoderate aboriginal returns. | |||
The information underscores the celebrated punctuation of legendary capitalist Warren Buffett: "Be greedy erstwhile others are fearful and beryllium fearful erstwhile others are greedy." Panic selling...
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