SIPs are not good. Many of you will say, Anant
SIPs are your favourite mode of investment.
Why are you against SIP? Because every investment mode
has its IFs and BUTs. We must decide with everything in mind.
Is this mode good for me or not? We talk in detail in this video.
Nowadays, the Market is at its ATH. All new investors that are coming,
they are being shown the last 1-3 years of SIP return. Even of last 5 years.
Since the market has rallied in last 1 year, all returns are attractive.
All investors are thinking that they have missed a big opportunity.
People are made to do new SIPs by showing that opportunity.
In this video with data, with fact, with psychological reasons,
with each point in mind, we'll understand
how to use SIP as an investmnet mode.
Which is one of the best investment mode.
But it has its IFs and BUTs. How should we use it?
Which qualities are required if we want to earn money by SIP.
We'll discuss this in detail.
And many IFs and BUTs, that you had never heard before.
Some pointers that every SIP investor must understand, know,
and identify. To make sure he understands them is very important.
We'll cover all that in this video.
My name is Anant Ladha CFA, CA, CFP, LL.B
Before we start this video. Open for All channel,
is available on Telegram as Invest Aaj For Kal.
This is its screenshot.
Today's video will be very important every mutual fund and SIP investor.
Let's start.
[Intro Music]
Two qualities that are important for every SIP investor are,
we'll understand them first then psychological pointers.
Then real-life data. It's not that we'll only take data of good times.
We'll crunch data of both good and bad times, of which I'm very sure,
you wouldn't have done before. We'll analyze data of many mutual funds.
Then we'll figure out which type of investors should avoid SIP mode
and which one should use SIP as an investment mode.
Let's start with the first quality. Look, whenever you invest in SIP.
The first important quality is having patience. Assume you started gymming,
started exercising. Will you get 6 pack figure after the first day itself?
I'm very sure, No. You'll have to exercise regularly with patience.
2nd important point: Consistency. You'll have to have patience, but
consistent efforts will be needed. What's the meaning of this?
There is a very famous dialogue of Bruce Lee.
He says he doesn't fear an opponent who has practised 10,000 kicks once,
but he fears an opponent who has practised one kick 10,000 times.
Because he'll have perfection in that particular kick.
Consistency is going to be the most important factor.
Let's understand using a psychological example.
Suppose that you have planted a bamboo tree.
Bamboo tree is the world's tallest grassroot. You all know this.
It takes 5 years and 3 months to grow. It grows almost up to 90 FT.
You planted it today. You nurtured it perfectly.
You gave water regularly for 1 month, 2, 3, 6 months.
You watered it for 1 year. Regularly nurtured the bamboo tree plant due to
which its height will be 90 FT. in 5 years and 3 months.
Try to imagine its height after 1 year. Do the normal mathematical calculation
According to normal mathematical the calculation, it should be 15-20 FT.
We have to reach 90 FT. It should grow at least 15-20 FT in a year.
Do you know the reality? After 1 year your bamboo tree's height will be 0.
Imagine that you made efforts for 1 year and you get height as 0.
You tried again for 1 year. You made efforts in the 2nd year.
After 2 years your bamboo tree's height will be 0.
You tried for the 3rd year. Anant says to have strength
and patience. You kept patience for the 3rd year.
After 3 years, your bamboo tree's height will be 1-2 inches.
Not Foot but Inch. Imagine after 3 years of work, its height is only 1-2 inches.
After 5 years 3 months, it is 90 FT. But now, you'll know not to trust it.
You'll think it has to reach 90 FT. It is just 1-2 inches after 3 years.
What's this happening? Imagine it. It remains the same after 4 years.
After 5 years it remains the same. You think, my 5 years are now a waste.
Now, at least I should remove it. Another plant can grow here.
But you know that after 5 years, magic will happen.
Between 5 years 1 day to 5 years 3 months,
In these 90 days, the bamboo tree's height will go from almost 0 to 90 FT.
Think about it. For 5 years it is almost 0 but in the next 90 days,
magic happens and the height reaches 90 FT. and it becomes the world's tallest grass.
Think about what happens in 5 years. The tree doesn't grow in the first 5 years.
What happens in those 5 years. I am sure many of you got it.
In those 5 years, roots of that the plant was getting stronger.
Roots after expanding for 5 years, In 3 months, we can see the growth
, which is the bamboo tree. In real life, SIP is also like this.
Mark my words, you'll get very good results in first 1-3 years.
Just like new investors are getting now.
In the long term, your starting the journey is going to be painful.
Actual after will be after 5 years, for the next 90 days after 5 years.
You'll need to have patience. We'll try to take 2 examples.
Now we're taking hypothetical example.
After which we'll take real-life examples.
Stay alert till the end of this video.
The first example, Suppose you did a SIP of Rs 10,000.
Your SIP will grow at a flat 12% rate. Think about it.
The first example is of your SIP of Rs 10,000 which will be at the rate of 12%.
Before that, remember that
height of the bamboo tree is the return of wealth creation.
Roots are very important for the first 5 years.
These are going to your units. In first example, you have to invest Rs 10,000 pm
Here, you'll get a flat return of 12%.
When you invested Rs 10,000 pm for 6 years. It will almost double by then.
If your mutual fund's value was Rs 10. It will be Rs 20 with the data you have.
If you invested for 6 years with flat returns of 12%.
Your emotion is completely free. You don't need to worry.
Emotionally it's good but actually, it's not good.
Because You have invested for 6 years but its price is increasing.
Your roots are now less deep. You are getting fewer units with time.
When you'll calculate your total units after 6 years.
You'll have 52,488 units in this first case.
Lets' talk about 2nd case. In life, you'll mostly get this case.
What will be in 2nd case? Your invested MF has a NAV of Rs 10.
For the first 5 years, your NAV remains the same. It just fluctuates.
In last 6 months or 1 year, actual bounce comes.
An example is in front of you. You can calculate.
In real life, mostly this happens. What will happen in this case?
For the first 5 years, you'll think that I should have invested in RT.
Should have paid my EMIs. My money got wasted for 5 years.
Anant says that you'll get good returns after 5 years in SIP.
It has been 5 years. I should now stop SIP.
It has been 3 years. I should now stop SIP.
I am devastated. I am not getting any returns.
But let's talk about total roots. You'll have 68,490 units after 6 years.
16,000 more than before. If we talk about fund's value,
In 1st case, you'll get Rs 10.26 Lakh for your investment of Rs 7.2 Lakh.
In the 2nd case, you'll get Rs 13.38 Lakh for your investment of Rs 7.2 Lakh.
You can see 2nd path is difficult. 2nd path is realistic.
You'll get the 2nd path whenever you invest in Mutual Funds through SIPs.
So, the results that you are being shown of last 2-3 years are completely false.
If you investing in SIP to get good returns in next 1-3 years,
and after 3 years, you'll take out your money from the market.
It is completely wrong. If you are doing SIP with this mindset,
then SIP is not for you. I'll show you a live example.
First I'll show you chart of SEPT 2010.
If any investor had invested in SEPT 2010,
in SIP for 3 years. In all good funds.
I took the best funds of that time.
You can check out the complete data. All were the best funds.
As you can see, after 3 years returns were almost negligible.
Same as root developed for 3 years in a bamboo tree,
here also you have units which are similar to roots,
It will give huge returns in future, but
But we have to understand that returns were negative for 3 years.
Most of the investors had stopped doing SIPs during 2010-2013.
I'm trying to tell you my personal experience.
If at that time, If I had told investors to give some more time,
It is a bamboo tree. It will grow automatically.
At that time, they wouldn't have believed me because of low returns.
I have made this video today because nowadays you're getting good returns.
You can understand all the logical things being emotion-free.
You can check out that returns were negative or 0.
DSP equity fund whose name is now DSP Flexi fund, its return was -5%
Best fund of that time, DSP MIDCAP FUND was at -7%
ICICI MULTI CAP FUND was not at even 1%. You can check out others.
If you stopped your SIP or redeemed it after 3 years,
You booked your temporary negative returns.
You have gone home with negative returns.
What happened? If you had continued that SIP till now,
you can check out this data. I have taken figures up to MAY 2020.
When NIFTY was not even above 10,000. You check out returns of that time.
Genuinely, if these were active till now, all would have return above 17%
Why did I take May's data? Because you'll say,
what's the difference between you and them if you show good figures of recent times.
That's why I took nominal figures.
I took March's figure when the market was down
and today's figure too, where everything is good.
May can be said to be neutral. We can say everything was in trouble in May.
Nifty was below 10,000 in May. You can check that data here.
It's not the only one. There'll be more examples for you ahead.
If someone had started SIP in 2008. Next year he had negative returns.
It was from -40% to -60%. You can check it out here.
What happened in 3 years? Every good fund SIP had a return of 20-25%
In 10 years it was 15-17%. Even after knowing the pain in starting of 2008.
1st year you'll have great pain. It's not only about 2008.
It was a time of crisis that's why. Let's take other examples.
If someone started SIP in NOV 2010. Returns of 1st year were negative.
You can check it out here. It was from -4% to -10%.
But, What happened after? Everything is just in front of you.
If SIP was continued for the next 10 years then returns reached up to 17%.
If someone invested in JAN 2015. 1-year return was 10-15% down.
If he kept investing for 3-5 years. Returns again reached above 15%.
If I talk about recent times. If someone started SIP in 2018.
Its return in 2020, even till JUNE was sure negative or low.
Meaning? You should not invest in SIP by looking at the last 1 years' returns.
SIP is not for you. SIP must be planned for a minimum of 5 years.
I am not telling you that you'll get good returns after 5 years.
It's minimum. If your time duration is 5,10,15, or 20 years,
Then SIP is the best option for you. Here, I am talking about equity SIP.
I'll get a question here, Anant, you are in connection with the market so much.
You main Anant Ka Funda daily. You make videos and track the market daily.
We know that you know about the market.
When you knew that market was at its top in 2008.
Or whenever it was at top 2010 or 2015.
and SIP returns of next year will be low. Then why did you made us do SIP?
You should have said that as you know about the market.
You should have stopped us. Don't do SIP. Pause now and do it next year.
Why didn't you stopped us? Why did you say to do SIP?
Before I answer this, If you want to join our team,
MF, Insurance, Health Insurance, Term Insurance. Every important link
and numbers are in the description. If you don't have DEMAT.
DEMAT Account opening links are in description.
You can consider a private channel membership or Join button membership.
All important links are present in the description.
What's the answer to this? The answer is complete data.
Let's go back to data and discuss in detail.
Here you'll have interesting data. Suppose someone invested in the 2008 peak.
When the market was high VS A investor who started in SIP in MARCH 2009.
At this time market was at the bottom. One investor started at an extreme high.
Other at the bottom. What'll be the difference of returns of them?
If there was a gap of 2 years,
then difference between returns would be huge.
But here time is less. If time is less, you have to make sure,
that you invest at the correct time. It's important in the case of SIP.
If we see returns and data of 2013. Data is in front of you.
Names of funds/schemes are in front of you. You can check them out.
You can see that there is not much difference in 2015.
There are minor ones, but not that big to notice.
If you see data for 2020, Again I have not taken data till today.
I have taken data till May, because it was a time of distress back then.
If I take today's data, you'll say, Anant, Everything is well nowadays.
That's why I have taken data when everything was not so good.
You can see that peak investments are also giving good returns.
There are not huge returns, whether you invest at peak or bottom.
2 important qualities are important in SIP,
About which we had talked about. Patience and Consistency.
You should be ready to see bamboo tree with 0 height in first 5 years.
You get afraid and redeem it after 5 years, then don't invest at first.
Because when have invested for 5 years, you staked FD returns on it too.
At that time, you'll have dissatisfaction. Anant, I should have cleared my EMIs.
I got no returns in 5 years. If your time horizon is below 5 years,
then equity MF SIP is not for you. You should avoid it 100%.
You should continue with Debt product or FD. Have faith in my words.
If you invested by seeing the last 1 or 3 year returns. The probability will be that
you are dissatisfied after 3 years. Don't tell me afterwards that,
"Anant, you didn't tell us that we should be in for a minimum of 5 years."
Today, Equity SIP is one of the best options.
Provided that you have a time the horizon of a minimum of 5 years.
Don't need to ask for 7, 10, or 15 years.
The patience of 7, 10, or 15 years that I'm saying for MF SIP is completely true.
It's not the same to buy and forget a direct equity share.
Equity MF and Shares are different things.
We need to deal with them differently.
I hope, you are regularly connected with this channel,
You must know the difference and the ways to deal with them differently.
If you liked this video. Don't forget to go without liking it.
Don't forget to subscribe to the channel.
I'm very sure that the data and analysis in this video
was never before anywhere. Don't forget to share with friends.
Every important link, whether it's a DEMAT account,
or You want help from our team in MF investing.
Every important link and numbers are present in the description.
Happy Investing and I'll see you very soon.
[Disclaimer]