Historical data suggests that the Systematic Investment Plan (SIP) which has delivered comparatively lower returns in the initial 5 years, has delivered a better return on 10 years basis on an average, as per a study, conducted by WhiteOak Capital Mutual Fund.
Equity as an Asset Class is relatively very volatile and, there can be periods of low returns in the initial investment journey of a long-term SIP.
Equities have proved to be a volatile asset class in the past. But, the study reveals volatility reduces as investors increase their investment horizon, the study found.
An average Large Cap stock is generally less volatile than an average Small and Mid Cap stock and provides stability to the portfolio.
However, the Small and Mid Cap (SMID) segments may offer many opportunities for potential higher growth in the long run.
The study reveals that, among the three market cap segments, Mid Cap Segment was a good investment option for investors seeking to invest via the long-term SIP route.
A historical data analysis suggests that in the long term, it hardly matters if the investor invests via Daily, Weekly, or Monthly SIP Frequency.
All three frequencies end up generating somewhat similar returns.
The key takeaway from the analysis is to focus on investing a small amount regularly for the long term Over the years, the Systematic Investment Plan (SIP), a feature offered by Mutual Funds, has become a household name.
