Imagine this: The stock market is collapsing. The headlines shout doom. Your friend sells his investments in a panic. However, you? You maintain your composure. You actually smile. Because you see an opportunity where others see a crisis.
Why? Because you’re investing through a Systematic Investment Plan (SIP), which not only survives but also grows stronger when markets decline.
Curious? Let’s explore how SIPs make volatility your best friend and why market downturns are your best-kept secret weapon for accumulating wealth.
Why Market Crashes Are a SIP Investor’s Best Friend
Most people fear market crashes. But SIP investors? They welcome them. Here’s why:
The Magic of SIPs in Volatile Markets
1. Rupee Cost Averaging: Buying More for Less
When markets fall, the price of mutual fund units drops, but your SIP amount stays the same. This leads to Rupee Cost Averaging:
- If the market is high: Your ₹5,000 buys fewer units.
- If the market is low: Your ₹5,000 buys more units.
This strategy helps you buy low without timing the market, balancing your average purchase price over time and boosting returns when markets recover.
Example:
- Month 1: Market high → ₹100/unit → You get 50 units for ₹5,000.
- Month 2: Market crashes → ₹50/unit → You get 100 units for ₹5,000.
Average cost? ₹66.67/unit (instead of ₹75 if you invested a lump sum). When the market rebounds, those extra units multiply your gains.
2. Volatility = Free Discounts on Your Investments
Think of market dips as a “sale” on stocks. Just like you’d buy more clothes during a Big Billion Day sale, SIPs let you automatically buy more units when prices drop.
The best part? You don’t need to predict the market. Your SIP does the heavy lifting for you.
3. The Power of Staying Invested
History shows that markets always recover.
- 2008 Crash: Sensex fell from 21,000 to 8,000. But by 2010, it was back to 20,000.
- 2020 COVID Crash: Sensex dropped 40%… only to hit new highs in months.
If you stopped your SIP during these crashes, you missed the recovery. But if you stayed? Your patience was rewarded.
A Real-Life Story: How Ramesh Turned Market Crashes Into ₹1 Crore
Let me tell you about Ramesh, a school teacher who started a ₹5,000/month SIP in 2008—right before the global financial crisis.
- 2008: Market crashed. His friends pulled out their money. But Ramesh continued his SIP.
- 2009-2010: Market recovered. His extra units from the crash started growing.
- 2023: After 15 years, his total investment? ₹9 lakhs.
- Final value? ₹1.2 crores.
How? Because he didn’t stop when others did. His SIP bought more units at lower prices, and compounding did the rest.
The Secret? Compounding + Discipline = Wealth Creation
- Compounding: Your returns earn more returns. Over time, this snowballs.
- Discipline: SIPs force you to invest regularly, no matter the market mood.
Ramesh didn’t need to be a stock expert. He just needed time and consistency.
What Should You Do When Markets Fall?
- Don’t Stop Your SIP
- Pausing during a crash means you lose the chance to buy cheap.
- Increase Your SIP if Possible
- If you have extra cash, invest more when markets are down.
- Think Long-Term
- SIPs work best over 5+ years. Short-term noise doesn’t matter.
- Ignore the Noise
- Media loves drama. Your SIP loves patience.
Final Thought: The SIP Investor’s Mindset
Warren Buffett once said:
“Be fearful when others are greedy, and greedy when others are fearful.”
For SIP investors, this means:
- When markets rise? Keep investing.
- When markets fall? Keep investing even harder.
Because every dip is just another step toward bigger gains.
Ready to Make Volatility Work for You?
Try our SIP Calculator to see how much your investments could grow over time.
[Calculate Your SIP Growth Now] Sipcalculator
Stay invested. Stay smart. Let your SIP do the rest.
Warm regards,
Team Anupam Wealth
Helping you build wealth, one SIP at a time.