'SIP' some lessons behind the big wins in Paralympics and stock market

Prior to our sterling performance in the recently concluded Tokyo 2021 Paralympics, where India ended up hauling an impressive 19 medals, we had previously participated in 5 editions of this mega extravaganza of sports, where we had cumulatively earned just 12 medals. A massive leap, right? 

In fact, India’s total gold medal tally before this Paralympics was a mere 4. This year alone, we won 5 golds, 8 silvers, and 6 bronze medals. While the Paralympics are a testament to the resilience, spiritedness, patience, and commitment of our athletes, there are some underlying insights for all of us to adhere to when it comes to winning handsomely in the stock markets as well! Take a look: Patience is a virtue, says the market

Say you invest just Rs 1,000 per month in the stock market for a period of 5 years. Calculations suggest that at an expected, assumed 12 percent rate of returns, you’ll end up earning Rs 22,486 in returns over your total investment of Rs 60,000, taking your corpus to Rs 82,486.

The construction of Rome and that of our eventual, magnificent win in these games was also not an overnight affair, right? It took time, patience, and discipline. What if you were just as unwavering with your investments? With the same 12 percent returns in tow, glance through the exponential rise in your money overtime:

Wondering where the immense rise in your corpus comes from? That’s the power of compounding, or interest accumulation over interest, which has the potential to give you extremely handsome returns in the long run. 

As Veteran financial planner Sanjeev Dawar puts it, “You don’t need to be a millionaire to start an investment journey.  But you can surely become one in the course. Or, as Bollywood would phrase it, Dheere Dheere SIPs ko badhana hai, financial goals ke success se guzar Jaana hai.

He further elaborates, “Through SIPs in Mutual Funds, we can start with as low as Rs. 1,000. A diversified portfolio reduces the risk of volatility, unlike direct equity. And issues like timing the market or picking individual stocks can be easily avoided”. Investing through SIP in mutual funds is also favorable during volatility due to rupee cost averaging. As a fixed amount is invested each month, lower NAV (Net Asset Value results in a higher number of units being purchased. On the other hand, a higher NAV, on the other hand, means greater fund value of accumulated units 

Insurmountable odds, what's that? When shooter Avani Lekhara was 12, she sustained spinal cord injuries, permanently impairing her legs. She went on to win both gold and bronze medals. Sumit Antil, who also won a gold medal in Javelin's throw this time, had to have his left leg amputated due to an accident in 2015. The story does not stop here. Bhavinaben Patel, who was struck by Polio when she was all of a year old, won her silver in a wheelchair. Bronze medalist shuttler Manoj Sarkar had a similar trajectory, having been afflicted by polio in his right leg in his childhood. 

The recent Paralympics regiment is replete with such gritty, inspiring stories, where our athletes conquered all odds to reach where they are!  The lesson? There is no right time, or way to achieve great heights, in the market and in life! And one way to start winning big is to invest smartly.

Per Vikas Singhania, CEO, TradeSmart, "Investing needs to be inculcated as a habit. It is very difficult to predict the tops and bottoms and thus one needs to stay put and stay disciplined through various market cycles. One needs to know that anytime is a good time to start. One can begin small, and spread the investment over months with SIPs”. 

Typical investor behavior is countercyclical to market performance. Panic selling and withdrawals ensue when markets start falling and buying en masse begin as the stock markets soar to new heights. So, what can you do to make your calls right?

Saumya Shah, Founder, Tarakki, an online investment app, has a solution. According to him, “In the past year, markets have, time and again, touched new highs and this will continue as our economy expands from a $2.78 trillion to $5trillion probably by 2025-26.  Keeping this in mind, one should continue investing via SIPs as they can capture the volatility and movements of the markets and avail the benefit of rupee cost averaging.  If one has an investment horizon of 5+years, investing in equity mutual funds can be the best opportunity for wealth creation. For short-term goals less ranging from 12-18 months, capital protection should be of utmost importance and one should continue to invest in debt mutual funds”, he signs off.