Stock market is falling, should you continue your SIP or stop it?

After a long bull run, the Indian stock market may now see a downward trend. There are many young investors who may have never seen a bear market i.e. a long period of sluggishness on Dalal Street. Many questions may also be arising in their mind. One question may also be that if the stock market continues to fall further, then should they stop their Systematic Investment Plan (SIP) or continue it.

Should SIP be continued in the bear market?

The answer to this depends on what is your goal regarding SIP. This means for how long you plan to do SIP. Near term, mid term or long term. Most people do SIP for a long period, in a way for retirement planning. But, some people also do it for the near term, like if they have a plan to travel somewhere at the end or beginning of the year. If you are also among those people, then redeeming the SIP can be a better option for you, because the value of your investment can decrease in the near term.

What to do with mid-term SIP

Some people do SIP for the mid-term. Their purpose can be to collect money for their own or sibling’s marriage. Also, there is a trend of doing mid-term SIP to buy a house or any other property. If you are doing SIP with a mid-term goal, then the situation can be a little complicated for you. If you are doing SIP with a goal of five years and only a few months are left for the completion of the period, then you can redeem the SIP. On the other hand, if you are in the initial stage, then you should continue the SIP.

Benefits of continuing long term SIP

If you are doing SIP for long term i.e. retirement plan, then you should continue SIP even during the period of decline in the stock market. In fact, you get more benefit by continuing SIP in the bear market, because at this time you buy more units. If your mutual fund house has bought a unit at a high price, then it also helps in averaging it, which you get the benefit of in the long term.

What is SIP

SIP means (Systematic Investment Plan). Many people do not know the ups and downs of the stock market. Mutual fund houses offer systematic investment plan for them. In this, you have to deposit a fixed amount every month. Then your fund house buys shares of different companies with that money. When those shares rise, you get its benefit in the form of better returns. You can start investing in mutual funds from Rs 100 per month.