Is it better to start an SIP at the market’s peak or when it's at rock bottom?

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 Is it better to start an SIP at the market’s peak or when it's at rock bottom? 🤔 

𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫 1 (𝐒𝐭𝐚𝐫𝐭𝐞𝐝 𝐒𝐈𝐏 𝐢𝐧 𝐉𝐚𝐧𝐮𝐚𝐫𝐲 2008) - 𝐌𝐚𝐫𝐤𝐞𝐭 𝐏𝐞𝐚𝐤 :

* Monthly SIP: ₹10,000 in BSE Sensex TRI.

* Total investment by July 31, 2024: ₹19.9 lakh.

* Current value of investment: ₹74.7 lakh.

* 𝐗𝐈𝐑𝐑 : 14.4%.



𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫 2 (𝐒𝐭𝐚𝐫𝐭𝐞𝐝 𝐒𝐈𝐏 𝐢𝐧 𝐌𝐚𝐫𝐜𝐡 2009) - 𝐌𝐚𝐫𝐤𝐞𝐭 𝐁𝐨𝐭𝐭𝐨𝐦

* Monthly SIP: ₹10,000 in BSE Sensex TRI.

* Total investment by July 31, 2024: ₹18.5 lakh (₹1.4 lakh less than Investor 1).

* Current value of investment: ₹63.8 lakh (₹10.9 lakh less than Investor 1).

* 𝐗𝐈𝐑𝐑: 14.7%.


𝐓𝐡𝐞 𝐝𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞 𝐢𝐧 𝐢𝐧𝐯𝐞𝐬𝐭𝐞𝐝 𝐚𝐦𝐨𝐮𝐧𝐭 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝐬𝐭𝐚𝐫𝐭𝐢𝐧𝐠 𝐢𝐧 𝐉𝐚𝐧𝐮𝐚𝐫𝐲 2008 𝐚𝐧𝐝 𝐌𝐚𝐫𝐜𝐡 2009 𝐰𝐚𝐬 ₹1.4 𝐥𝐚𝐤𝐡.


𝐓𝐡𝐞 𝐝𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞 𝐢𝐧 𝐟𝐢𝐧𝐚𝐥 𝐯𝐚𝐥𝐮𝐞 (𝐚𝐬 𝐨𝐟 𝐉𝐮𝐥𝐲 31, 2024) 𝐰𝐚𝐬 ₹10.9 𝐥𝐚𝐤𝐡.


Key Takeaways:


*  𝐂𝐨𝐬𝐭 𝐨𝐟 𝐃𝐞𝐥𝐚𝐲: Even though Investor 2 started during a market low, their corpus was significantly lower than Investor 1's due to the power of compounding over time.


* 𝐓𝐢𝐦𝐞 𝐢𝐧 𝐭𝐡𝐞 𝐌𝐚𝐫𝐤𝐞𝐭: The earlier you start, the more you benefit from compounding, regardless of market conditions.


* 𝐌𝐚𝐫𝐤𝐞𝐭 𝐓𝐢𝐦𝐢𝐧𝐠: Waiting for the "perfect" time can cause missed opportunities. It's better to stay invested over the long term rather than trying to time the market.


Conclusion:

𝐓𝐡𝐞 𝐫𝐞𝐚𝐥 𝐫𝐢𝐬𝐤 𝐢𝐬𝐧’𝐭 𝐭𝐡𝐞 𝐦𝐚𝐫𝐤𝐞𝐭—𝐢𝐭’𝐬 𝐦𝐢𝐬𝐬𝐢𝐧𝐠 𝐨𝐮𝐭 𝐨𝐧 𝐭𝐡𝐞 𝐩𝐨𝐰𝐞𝐫 𝐨𝐟 𝐜𝐨𝐦𝐩𝐨𝐮𝐧𝐝𝐢𝐧𝐠 𝐨𝐯𝐞𝐫 𝐭𝐢𝐦𝐞

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