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When the stock market suddenly falls, the first thing people start worrying about is their money. Red marks start appearing on TV, people start talking about losses on social media and many investors start feeling that now their money will be lost. At such a time, many people get nervous and stop their investment or withdraw their money, but most of the people doing SIP do not do this. They continue investing even when the market falls. Because they know that the market does not always remain down and goes up again after some time.

In fact, SIP is the only method which is useful even in market downturn. When the market goes down, more units are available for the same money. Later, when the market recovers, the same units help in increasing profits. Therefore, many experts say that it may be wiser to continue SIP instead of stopping it at the time of market crash.

A fixed amount is invested every month in SIP. Investment does not stop whether the market is up or down. When the market falls, the NAV of the mutual fund also decreases. Its advantage is that the investor gets more units for the same amount. Like he does SIP of Rs 5,000 every month. If earlier he was getting 100 units and after the market falls, he starts getting 180 or 200 units for the same amount, then later when the market goes up, his profit can be even higher. For this reason many people consider market crash as an opportunity. When the market is expensive, fewer units are available and when the market is cheap, more units are available.

What is the biggest mistake you make?

When the market falls rapidly, many people get scared and stop their SIP. Some people even withdraw money after seeing losses, but experts say that this is the time when it is more important to continue investing. Because no one knows the exact time when the market recovery will start. If a person stops SIP in the fall then he may lose the opportunity to buy more units at a cheaper price. For this reason, most SIP investors do not pay much attention to day-to-day fluctuations. Their focus remains on long-term goals, such as retirement, children’s education or buying a house.

Why does fear reduce?

The entire system of SIP runs on discipline. In this, investments are made automatically every month, hence people do not need to take decisions again and again. This is why SIP investors remain calm even when the market falls. They know that the fall in the market does not last forever but if the investment is continued for a long time, then the same fall can turn into good returns in the future.