The Indian markets have been volatile of late. A number of factors, both domestic and international, have led to jittery markets. Globally, there is an ongoing trade war between major economies such as the United States and China on one hand, and South Korea and Japan on the other. Domestically, growth in the Indian economy is being pushed back due to various factors including corporates delaying fresh expansions, consumers delaying purchases in order to await the festive season and so on.

As a Systematic Investment Plan (SIP) investor, you may be concerned about your investments in such a volatile scenario. However, as many SIP investors are looking to stay invested for the long term, the falling markets and uncertainty may work to your advantage. Volatile markets present two opportunities for the SIP investor:

• Chance to acquire more units: As the markets fall, your regular SIP investments will fetch you more units for the same amount that you invest. As and when the markets recover, the returns will be enhanced. So, in a way, volatile markets are a chance to buy more units at a lower cost.
• Maintaining portfolio balance: If investors continue with their investments in SIPs without rebalancing their portfolio, they may stand to gain as the portfolio will remain balanced between equity, debt and commodities such as gold. Exiting SIPs can upset this balance and requires investors to time the market. Some investors may invariably miss out the opportune time to re-enter the markets and may buy units at a much higher price when returning back to equities. Remember with the power of compounding in SIP, staying invested for longer will ensure that your reinvested returns will grow exponentially and have a positive impact on your overall returns.

Stay focussed on goals: Investors should give priority to their goals. You should ask yourself why you decided to invest in the first place and how your financial goals are defined. Market movements alone are not a parameter for withdrawing from existing investments. If your goals are long-term, then a SIP made for a decade will experience several market cycles and periods of volatility. However, markets have consistently proven in the past that over long periods, every peak is usually higher than the previous peak. Shifting funds from SIPs to cash holdings means foregoing long-term returns.

Markets function on a set of variables which lead to volatility. Use this period as an opportune time to achieve an average cost of investment that is eventually lower than the market value of the units of the MF you have selected for SIP investing. It is good to look at such periods from a new mindset.