SIP at the Top or Bottom? by WhiteOak Capital Mutual Fund

Bhubaneswar (30/09/2024): In continuation to WhiteOak Capital AMCs earlier SIP report titled, ‘Which is better, starting SIP at the Top or Bottom of Market Cycle? the company has come up with further insights on "SIP at the Top or Bottom?" The report is based on a detailed analysis using long-period data of BSE Sensex TRI (last 27+ years) and considers all those periods when equity market has fallen more than 20% from its Top.

The below table refers investment summary of two investors, one who started a Rs.10,000 monthly SIP at the Top of various market cycles and the other at the Bottom: It is interesting to note that while the % return is marginally higher for SIPs started at the bottom of the market cycle, the absolute gain in rupee term (Wealth Creation) is far higher for SIPs that began at the top.

The Cost of Delay of starting SIP late can be huge over the long term.

The longer the market takes to reach the bottom, the higher the Cost of Delay, keeping all other things constant.

Even the marginal difference of % return goes away over the long-term, irrespective of whether you started at the top or bottom (refer to the return difference for SIPs during the first 6 Market Cycles, that is in long-term). The calculations given on previous page do not consider stamp duty/levy etc.

for ease of calculation and the values shown are pre-tax.

Investors may incur tax liability on capital gains based on prevailing tax laws.

Any calculations made are approximations meant for understanding a particular concept only.

These calculations/views alone are not sufficient and should not be used for the developing or implementing an investment strategy.

Investors should consult their financial advisers if in doubt about whether the product is suitable for them.