For most investors, SIPs have been at the forefront of their investment portfolio. Investors who are averse to risk, and looking to accrue high returns depend on SIPs and their power of compounding the rupee. However, off late, investors’ hopes have been dimming due to the bleak returns that SIPs have garnered from the market. According to a report by NJ Wealth, SIP investors have been seen losing in 78 of 137 equity mutual fund schemes. Moreover, their average loss for 2 years has been calculated to be 1.5%.
Are stocks heading south?
Your mutual fund investment, whether in the form of SIPs or as a lump sum, is played across a range of stocks as per the type of fund you choose. The mutual fund expert or fund house distributes your money in such a way that you get every penny’s worth directly from the stock market. Moreover, they take into consideration any and all market dips to buy extra units for your investment. However, the volatility of the stock market has not boded well for SIP investors at present.
NJ Wealth Report further states that the loss incurred on SIPs is higher in small-cap and mid-cap funds, and can be accounted at 6%. On the other hand, large-cap funds have grown by 1.5%.
How will it affect investors?
Mutual fund investors may not want to wait too long, to access hefty returns on their investment. In most cases, investors like playing the short-term card to get their money off the market, whenever they feel there is a chance of favourable earnings. From the year 2018 onwards, however, investors have become wary of such short-term possibilities, doubting the strength of returns on SIPs. This can be explained simply by looking at the CAGR percentage for SIP growth compiled on 31st January, 2019. According to this tally, equity mutual funds with a tenor of 5 years were only seen drawing a 10.28% return.
Even though SIPs are flexible investment options that you can start with a small sum of money, given the present projections, SIPs do not look too rewarding. So, if you are aiming to invest in SIPs, thanks to their high historic returns, you should focus on SIPs from the long-term perspective.
Optimise your returns with FDs instead
While the stock market is facing a downturn, you can shift your attention to low-risk, yet high-earning investment options. Fixed-income investment instruments like fixed deposits can be better alternatives to growth-oriented investments, as your returns are not market-linked. You can benefit from assured returns, and choose varied tenors to maximise your gains, especially as most issuers offers special tenor FDs, so you can gain better returns.
You could choose trustworthy investment options like Bajaj Finance Fixed Deposits, where you can benefit from FD interest rates up to 9.10%. Moreover, if you choose the 15-month special tenor variant, you can get an additional 0.25% interest on your original return. The return assurance on these FDs is very high as Bajaj Finance FDs boast ICRA’s MAAA and CRISIL’s FAAA rating, which is of the highest safety standard.
You can override market uncertainties and volatilities by using fixed deposit calculator to forecast your exact returns and ladder your investments as per your goals. By planning the maturity of your FDs in advance, you can ensure that your payout aligns with your investment goals without any hassle.