[Value Research Editor's Note]( 22nd June, 2024 --------------------------------------------------------------- Dear {NAME}, Every Saturday, I share my perspectives on a topic investors will find useful. This time letâs take a look at the frenzy in the markets around the election results⦠A perfect lesson on SIPs Around the beginning of this month, an acquaintance who recently retired from a senior government job contacted me to plan his post-retirement investments and income. After some discussion, we made a list of funds in which he would start SIPs. By pure coincidence, we finalised the investments on 3rd June, the first day of trading after the exit polls. Stock prices were zooming up, but since we were starting long SIPs, we hadnât even looked at the markets. While we placed the transaction orders on the evening of that day, my friend got the next dayâs â June 4th â NAVs. Of course, that was the day the market crashed. Since then, stock prices have shot up, and the indexes and most diversified equity funds have been at all-time highs. The investments that my friend made that day are up by about 8 per cent. However, this is actually irrelevant. By itself, it does not matter at all. The investment that my friend made was just one month in a 24-month SIP series. Yes, itâs up nicely in just a couple of weeks, but the point is not that itâs up; it is the nature of SIPs. Some months, you get a bump up, and some months, you get a push-down. You get a few fewer units in the former and a few more in the latter. On the whole, it works out well as the markets rise over an extended period of time. The point is that steady SIP cost-averaging is the right way to do this, and timing the market is not a reliable strategy for most investors. Trying to predict short-term market movements often leads to missed opportunities and disappointment. What truly matters is the consistency and discipline of investing over the long term. Market fluctuations are part and parcel of investing in equities, and those who remain patient and focused on their long-term goals are more likely to reap the rewards. My friendâs story contrasted nicely with that of another, less sensible group of investors. These were the ones who tried to invest in mutual funds on 4th June in order to get a low NAV. That was the day when the Sensex was down 9 per cent at the point. While most investors were cutting and running, a few brave souls decided to invest in equity funds that day and get a low NAV. Remember, if you invest before a designated cut-off time on any day, your units should get allocated at that dayâs NAV. However, there are many moving parts to the machinery, such as the front-end app you are using, banks, the clearing house, the registrar, the fund and so on. If the investorâs money does not reach the fund in time, then the investor cannot be allotted units on that dayâs NAV. As it happened, on June 4th and 5th there were many people who were complaining about this on social media. They claimed that despite placing their mutual fund investment transactions well in time on June 4th, they did not get that dayâs low NAVs. Instead, they got June 5th NAVs, which were higher by perhaps 2 to 3 per cent for most equity funds. So while the punters tried to trade mutual funds and didnât succeed, people like my friend succeeded without trying, and there lies an important lesson. The true value of systematic investing lies in its ability to mitigate the unpredictability of market fluctuations. While the short-term gains my friend experienced are gratifying, they are not the essence of successful investing. Instead, the crux of effective wealth-building through mutual funds is rooted in the principles of regularity and patience. No individual day matters all that much â but the aggregate of all days will make you rich. Thank you for being a Value Research Insider. I hope you found this note useful and interesting. What did you think of todayâs note? [Let me know](mailto:dhirendra@valueresearch.in). If you know anyone who would enjoy it, please forward this email. They can sign up for free [here](. You can also subscribe to the Hindi version [here](. [vro-logo]( Copyright © Value Research India Private Limited 2024. All rights reserved. C-103, Sector 65 Noida, 201301. [Manage Newsletters]( [Unsubscribe]( [Privacy Policy]( Follow us [twitter-icon]( [facebook-icon]( [youtube-icon]( [linkedIn-icon]( [instagram-icon](