SIP V/s MARKET CRASH (ENGLISH)

 SIP V/s MARKET CRASH

•  Sip shouldn't stopped, sip should be continue, You need to deploy Extra fund during panic phase and You will see big jumped up in gain when peak of bull cycle. How???????????
  
• Suppose you doing Mutual fund sip 5000 rs in XYZ schemes
  
  
  
  That you need to continue Whenever fall like 10 to 15% fall happen on index level start deploying lumshum also
  So you get more NAV with cheap price

1) Eg. Let see some example

Suppose you start at NAV 100 Sip amount 5000

Jan 2021 =>Nav 100 =>Qty 50,
Feb 2021 =>Nav 98 =>Qty 51,
Mar 2021 =>Nav 98 =>Qty 51,
Apr 2021 =>Nav 100 =>Qty 50,
May 2021=>Nav 102 =>Qty 49,
Jun 2021 =>Nav 105 =>Qty 48,
JULY 2021 =>Nav 107 =>Qty 47,
AUG 2021 =>Nav 110 =>Qty 45,
SEP 2021 =>Nav 110 =>Qty 45,
OCT 2021 =>Nav 102 =>Qty 49,
NOV 2021 =>Nav 100 =>Qty 50
DEC 2021 =>Nav 95 =>Qty 52,
JAN 2022 =>Nav 90 =>Qty 56,
FEB 2022 =>Nav 85 =>Qty 59,
MAR 2022 =>Nav 90 =>Qty 56,
APR 2022 =>Nav 100 =>Qty 50,
MAY 2022 =>Nav 110 =>Qty 45,
JUN 2022 =>Nav 120 =>Qty 42 Total qty : 895
Avg price : 100.56
Total invested : 90k
Total month : 18 Afternoon 18 month latest Nav at 120 just assume Your return could be 19.33%

Profit at 17400

2) Now we invest when NAV fall bigger way when 10% fall happen on NAV you invest 2x of your investment other than sip amount

Like you doing sip with 5k you adding 10k lumshum when 10% or more it fall This happen 3 times as per above case NAV went below this level in:
Dec 2021 → NAV 95
Jan 2022 → NAV 90
Feb 2022 → NAV 85 So you count unit you get 334 extra unit Also your avg price goes down from 101.56 to 97.65 So double advantage 1. Avg NAV goes down
2. Total no of unit increase If you count percentage return then extra added sip gave you 22.9% return
 

While normal way gave you 19.33% return So here you get alpha. 

Short summary of above case scenario You invested ₹5,000 SIP every month for 18 months, so your
You invested ₹5,000 SIP every month for 18 months, so your total investment = ₹90,000. Through SIP you accumulated
Through SIP you accumulated 895 units, giving an average cost of ₹100.56. When the
When the NAV becomes ₹120, the portfolio value becomes: 895 × 120 = ₹1,07,400 So your
So your profit = ₹17,400, which means 19.33% return. Even though NAV rose
Even though NAV rose 20% (100 → 120), your return is slightly lower because SIP kept buying some units at higher prices (105–110). Now you added a rule:
Now you added a rule: invest ₹10,000 extra whenever NAV falls 10% from the peak. The peak was
The peak was ₹110, so the 10% fall level was ₹99. NAV went below this level three times (₹95, ₹90, ₹85), so you invested ₹30,000 extra. Those extra investments added
Those extra investments added 334 more units. Now the portfolio becomes: Total investment = ₹1,20,000 Total units = 1,229 New average cost = ₹97.65 At
At NAV = ₹120, portfolio value becomes: 1,229 × 120 = ₹1,47,480 So
So profit = ₹27,480, which means 22.9% return. Conclusion:  

Normal SIP gave about 19.3% return, while SIP + buying during 10% corrections improved return to ~22.9% because the extra purchases lowered the average cost from ₹100.56 to ₹97.65. 

Let understand with calculation below

1) BASE CASE 1 (Normal SIP Only)

Monthly SIP = ₹5,000  

Total months = 18  

Total invested = ₹90,000  

Total units accumulated = 895 units  

Average purchase price = ₹100.56  

If NAV = ₹120

Portfolio value = 895 × 120 = ₹1,07,400  

Profit = ₹17,400  

Return ≈ 19.33%

2)

2) CASE 2 EXTRA ₹30,000 INVESTED WHEN NAV FALLS 10%

Dip levels triggered at NAV: 95, 90, 85
Extra investment each time = ₹10,000 Extra units bought:
95 NAV → 105 units
90 NAV → 111 units
85 NAV → 118 units Total extra units = 334 New portfolio: Total investment = ₹1,20,000
Total units = 895 + 334 = 1,229 Average price = 1,20,000 / 1,229 ≈ ₹97.65 If NAV = ₹120 Portfolio value = 1,229 × 120 = ₹1,47,480
Profit = ₹27,480 Return ≈ 22.9%

3)CASE 3 — EXTRA ₹30,000 INVESTED WHEN NAV FALLS 3%

3% dips happened multiple times, assume ₹30k distributed equally
across those corrections (6 dip events). Extra investment per dip ≈ ₹5,000 Approx NAV levels used for dip buying:
98, 98, 102, 100, 95, 90 Extra units bought ≈ 297 units
(average purchase ~₹101) New portfolio: Total investment = ₹1,20,000
Total units = 895 + 297 = 1,192 Average price ≈ ₹100.67 If NAV = ₹120 Portfolio value = 1,192 × 120 = ₹1,43,040
Profit = ₹23,040 Return ≈ 19.2%

 

4) FINAL COMPARISON Normal SIP return → ~19.3% SIP + Buy at 3% dips → ~19.2% SIP + Buy at 10% dips → ~22.9% KEY INSIGHT Buying deeper corrections improves returns much more. Reason:
3% dips happen often, so you buy at prices close to normal levels. 10% dips are rare and usually occur during panic,
which lets you buy significantly cheaper units and reduce
the average cost more effectively.

 

STAY INVESTED. JAYDEEP PANDYA
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