Increase Your Wealth Corpus with SIP plus Lumpsum Investing Strategy | Data Study | SIP vs Lumpsum
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- Опубликовано: 31 май 2024
- SIP vs Lumpsum? In this video, I try to solve for this commonly asked question by exploring the virtues of combining SIP and lump sum investing & presenting the data results of my study into it's effectiveness. I have used Nifty 50 data spanning 17 years (2007 to 2023) and have conducted various simulations to analyze the performance of SIP and lump sum strategies. This includes a lump sum investment triggered by a 5% monthly correction, using a 15% drop from the Nifty all-time high and then a 2% monthly fall -- all of which resulted in an improved annualized return compared to SIP alone despite the complexity and numerous variables involved
► To read previous issues & subscribe to my newsletter : shankarnath.com
👉 The worksheet can be accessed here : docs.google.com/spreadsheets/...
👉 Video Chapters:
00:00 Objective of SIP and Lumpsum Investing
02:13 Assumptions for SIP plus Lumpsum Study
05:30 My XIRR Confusion
07:12 Results of a 2% Dip Lumpsum Strategy
11:50 Shankar's Viewpoint
#sipvslumpsum #sip #lumpsum
Disclaimer: I am not a SEBI registered investment advisor or research analyst. I am not registered with PFRDA or IRDA either. The content posted on this platform is purely for educational purposes and none of it constitutes investing or trading advice. Viewers should do their own research and diligence before investing or acting on the information presented. Some of the links I have posted in the video, the description, the comments and other related resources might be affiliate links
Absolutely loving this YT channel over last couple of months. ❤
Glad you are finding it useful!
I get a free data set of some of my random thoughts in investment, u are a true friend at a distance. May Lord Jagannath keep u safe always. Thnx to youtube prompts too that reflects similar thoughts.
Thanks for sharing this. Incidentally, I happened to spend my weekend exploring the very same idea over different indices & different frequencies (daily, weekly, monthly). And just like you while I could see the benefits of this approach in absolute terms, I was equally perplexed with the XIRR value coming almost the same for both cases. I was starting to question the merit of my analysis, happy that you have shared this video at the right time 😀
Wonderful!
Very well articulated. Great Job!
Glad you liked it!
This is golden advice sir. I have not seen anyone explaining this with data backing. Definitely will follow..
Glad you found it useful!
Your working is absolutely Fine. Thanks
So far the best YT videos about when to add-on your sip with a lumpsum.
Although I did sense this investment style as better one, his demonstration with numericals and reasonable hypotheses of the same is simply superb!❤🎉
Glad you found it informative
Excellent as always. Appreciate your efforts and time.
So nice of you. Thank you so much, Ajinkya
Excellent analysis! Thanks for your innovative content.
Glad you liked it! Much appreciated
Shankar, you’ve done such a wonderful job of explaining the strategy, not complicated at all. Kudos to you for building such wonderful content and keeping it simple and succinct.
Thank you so much 🙌 I'm glad you are finding these videos useful & informative
Wonderfully researched and beautifully articulated as always Shankar Sir 🙏.
So nice of you. Many thanks!
Thanks for the video, as some finfluencers say invest lumpsum at the bottom. Easily said but no one knows when the bottom is coming, and to quote NN Taleb: regular events can never predict when the next black swan is coming. When it comes, it takes everyone by a surprise.
The crux of the video what I have understood is, as and when you have lumpsum keep investing versus waiting for opportunities to invest. The more you wait outside, the more chances you are loosing to better your return.
thank you
Most welcome!
As always, something new & fresh... really like your work..
Thank you so much 😀
Your videos are like eating 5000 delicious dishes yet not feeling pukish. Such an easy, calm explanation to such complex topics for people like me who barely understands anything related to finance.
Thank you so much 😀
I am learning to invest and any time I have a question, I will search my question with shankarnath appended in youtube search and I mostly get my answer. Awesome GURU and great explanations. Thank you!
Glad you like my work!
All ideas are clearly told by you- 🙏
Thank you!
Thank you Shankar,, your analysis with multiple hypothesis were useful, more importantly your final tips or principles were easy to use. Your illustrated a tough one lucidly.
So nice of you. Thank you very much 🙌
Hello Shankar,
Thanks for guidance.
No confusion is there..
Always welcome! 🙌
Wow.... you are a truly data driven person sir... enjoyed the video and now need to think deeply for my strategies...Tks for detailed and clear explanation... 🙏
Most welcome, all the best!
Well Researched and Insightful Video as usual Shankar sir Discovered a unique approach towards sip&lumpsum investment 😊🙏❤️
Thank you so much. Glad you liked it
Excellent research sir, plz keep posting more like this..
Thank you
Excellent learning. Thank you Shankar
Most welcome!
Liked video before watching it knew it would be great thankyou sir for such content
So nice of you
Great research Shankar ji 🙏
Really helpful
Thanks for liking 🙌
Hi Shankar,
You are a gentleman.
Thank You for this video
My pleasure
Hi Shankar, Please throw some additional light on SIP+Lumpsum+Partial Profit booking (when market is overvalued) In other words, how to build the corpus for lumpsum itself and how partial profit booking can be used to park some amount for lumpsum investment when the opportunities arise.
Hi. SIP+Lumpsum+ProfitBooking is similar to what we learnt in my older videos on using valuations (PE ratio) to up SIP returns. There I were adding lumpsum when the PE multiple went below a certain number (18) and booking profit when the valuation was above a mark (24). Here's the video on that .. pls use this link, I have marked the point from where you can view it: ruclips.net/video/WT8_9-ll7XU/видео.html
@@shankarnathtry resimulating with first two instances in a year, instead of once(and first) in a 6 months period . Kindly reply if xirr changes
Also can try with 5% dip from all time high
Great
Hi @shankarnath your old video on profit booking when nifty goes above 24 and doing lumpsum investment when nifty goes below 18 .
I think this doesn't not work anymore, because if you see in the last 10 years nifty never went below 18. So what ever profit we booked when nifty goes above 24, we will be holding that amount forever waiting for nifty to go down below 18 . I think this strategy needs to be revised. What do you think?
Great!!! Nicely explained
Glad you liked it
Watching Only Your Fundamental analysis.
Shankar Nath, you are an amazing person!. I mean we are indebted you for doing these researches for us and helping us out. Watching all these videos free of cost sitting on our comfort zone.....Thanks a ton!. I always had this questions about the right time to invest lumpsum amounts on my MF. Your video makes sense...
I'm happy you found it useful and relevant to you 🙌
Excellent presentation, three months back i gave up on this idea , now your video encourage me to do more work in lumpsum + sip .
Thank you and all the best
Thank you Shankar for doing the all research and presenting it so clearly!
My pleasure. Glad you found it useful
Very aptly explained
Thank you
Very Good.
Thanks!
Im amazed
Good idea.
Thanks for the video
Glad you liked it!
Loved this video. i have been doing this for last 3-4 years and have XIRR of 26% as in Jan 2024.
26% XIRR is good or bad, because mine is 28% but not sure is this good or bad. I am doing it for past 3years.
Thanks for sharing
Hello Shankar, The concepts are beautifully explained. All our thoughts on this topic gets channeled to systematic approach and conclusion. We can develoip these concepts basis our requirements and assumptions... thank you
Thank you very much for the kind words & appreciation, Dr. Padmavathy. I am a firm believer in offering a path & allowing people to plan their journeys by themselves. I'm glad you like my work & approach.
Thank you very much.
You are most welcome! 🙌
XIRR is basically point to point return irrespective of the invested amount.. and hence whether its a sip of 5k or lumpsum of 50k at the same point doesnt matter.. CAGR would have changed a lot
OK. However when I change the different date e.g. 1-Jan-2023 in that example from 10,000 to 10,00,000 -- then the XIRR number moves by a 1-1.5%. Why is that happening?
That's point instead of investing lumsum at once, dont worry about market just increase sip amount the return will almost same
@@shankarnathHi shankar as I understand
XIRR is basically weighted avg of rate of return of your investments. By increasing the principal invested at any period you're only increasing the weight of that particular investment in your return calculation and not the individual value that goes in your calculation.
For example in your mentioned case(Jan 20 to Jan 24) if you calculate cagr of individual investment seperately they will come as 18.92, 18.56, 19.52 and 17.64 respectively. The more you increase the amt invested in Jan 20 the more your XIRR approaches the value of 18.92. That is to say your other investments done periodically start to become irrelevant.
In other words lumpsum investments can overshadow SIP returns not necessarily beat them unless you've timed the market exceptionally well.
Hope it helps cheers😊
@@rohitsolanki2563 spot on
So good ❤
Thank you!
Very good explanation of the concepts. A very insightful objective analysis.
Think the lack of benefit on the -5% Dip strategy is mainly because the strategy didn't participate in the bull run post April 2020. If you calculate just the absolute returns, Lumpsum has given 4 times returns as against 3 times returns for SIP. But XIRR seems different probably because it looks at cumulative accumulation of returns as against point to point returns.
When I tried to perform analysis only until Mar'20 in the same sheet, it shows 6.7% XIRR for SIP as against 7.1% for SIP + -5% Dip Lumpsum, as expected by intuitive logic
Thanks for your appreciation
Good explanation
Thank you
i do a sip of x, of which 2x/3 is put into equity and x/3 into debt.
the debt portion is deployed into equity, whenever there is a 15-20% drop from the top.
also some portion is removed from equity to debt on reaching all time highs. This has given me good returns on xirr basis.
Thanks for sharing
@@shankarnathhow are you switching between debt to equity
nice explanation...really hard work...keep it up
Thanks a lot
Love it❤
Thanks
Great video sir , in my opinion and experience lumpsum works well in more volatile market space like midcap & smallcap space
We invest lumpsum in smallcap or midcap in deep discounts and see wait for a proper full market bull run
Comparatively Nifty 50 is less volatile index
Thanks! This is an interesting contention you've raised. If you've done a data study on midcap & smallcap space with lumpsum, please do share it with me.
Superb, ur advantage is ur knowledge+ ur way f narration, keep rocking boss, also ask for a like at 35-45% f video length, because people will forget/lost track - even they want to do it.
Thanks for the suggestion
Thanks Shankar!!You are doing great job 👍
So nice of you. It's my pleasure!
Hi shankar
As I understand
XIRR is basically weighted avg of rate of return of your investments. By increasing the principal invested at any period you're only increasing the weight of that particular investment in your return calculation and not the individual value that goes in your calculation.
For example in your mentioned case(Jan 20 to Jan 24) if you calculate cagr of individual investment seperately they will come as 18.92, 18.56, 19.52 and 17.64 respectively. The more you increase the amt invested in Jan 20 the more your XIRR approaches the value of 18.92. That is to say your other investments done periodically start to become irrelevant. Similarly if you increase the amt invested in Jan 22 your XIRR will approach value of 19.52.
In other words lumpsum investments can overshadow SIP returns not necessarily beat them unless you've timed the market exceptionally well.
Hope it helps cheers😊
Thank you very much for sharing this, Rohit. Yes, I've received a few emails with excellent details on the same. Very useful stuff.
So does this mean that an investment done from Jan 20 till Jan 24 can have a maximum cagr of 19.52 (considering i invest the maximum in Jan 23 and peanuts on the other 3 SIPs)? Thanks in advance.
@@shankarnath can you pls do a small video on the variations the amount invested can have on the xirr and its relation with normal cagr will help us in understanding. Thanks in advance.
@@abhishekroychoudhury9693 Thanks for the suggestion
@@abhishekroychoudhury9693 Yes (assuming NAVs in the example mentioned) highest xirr you can get will approximate 19.52. But remember absolute returns are a cumulative factor of both rate and time. So Jan 20 investment will have higher absolute return despite lesser cagr than Jan 22 investment, so don't chase rate at the expense of time. Spend time in the market rather than timing the market.
Also I slightly disagree with Shankar in this video, a case for SIP is essentially an argument against market timing(averaging both cost and returns) while lumpsum is essentially a case for it(minimising cost maximizing returns) . An SIP + lumpsum approach is an attempt to ride 2 divergent boats. If you think you can time the market you are better off piling cash and investing at the right moment otherwise invest right away and ride market volatility.
An SIP + Lumpsum seems to be for a salaried employee that got bonus as suggested in the video but it would be interesting to see whether the employee would be better off investing the bonus right away or waiting for a market dip. I for one believe if you are a passive investor you should invest whatever you can as soon as you can. More money has been lost waiting for the market than being in the market.
As per my understanding of what Pankaj might have meant by 5% fall would be any fall of 5% from it's recent highs. This would provide more opportunities to invest within each year. I also feel that instead of having monthly SIP, one can invest whenever index falls by 5% from it's recent highs. This will most likely increase the returns
Maybe, this is an assumption but it does prop up questions
- 5% fall within how much time? 1 day, 1 week, 1 month, 1 year?
- Should that number be checked daily?
- What if day 1 the market falls by 5%, then day 2 it goes up by say 6% and again on day 3, it falls by 5%? Is this 2 lumpsum investments within 3 days? Are we assuming unlimited money
I think he means 5% fall from all time high. In 2023it gave 2 opportunities one of 9% and another of 6% fall.
@@urwithharsh Maybe. But the index can fall by 5% over a single day or it can fall by 0.1% every day over 50 trading sessions. I'm sure both these scenarios will be looked at differently.
The content you serve is absolutely amazing, and the way you incorporate all the scenarios is just mind-blowing. Thank you.
- Fan of your work.
You're very welcome!
Thanks a lot for shedding light on this highly confusing topic, although a simple 10 to 15 percent annual step-up SIP should also do the trick?
Instead of having to worry about so many other parameters & portals especially for someone who cannot get into the nitty-gritty of it all.
Please do create a video on fixed SIP, simple 10 percent increment SIP & or fixed amount increment SIP something like increasing Rs.500 or Rs. 1000 every year. Thanks a lot again & a ELSS fund selection & recommendation video still remains. ❤
Thank you Ravi for your suggestions & for sharing your views. I hope you have tested this out with data i.e the virtues of blindly doing a 10% step-up SIP versus buying when the market dips by 2-5%. It would be painful to see someone lose out on 6-7 lakhs in additional wealth because he/she thinks calculating the % change in two month's closing value is too much work
Hi Shankar Ji, have been following you from your ETMONEY days and appreciate your insights backing with data. Pls consider making video(s) sharing your thoughts on investing strategies post retirement (retired early / FIRE), would love to see your version of Bucket Strategy.
Thanks for the suggestion
I am interested in "Shankar nath Investment University" I can invest all my saving in it. Because I confident about its success.
Great sir 👍 your videos are amazing .
Thank you very much!
Shankarji,
Your traditional attire looks good.
Thank you!
I liked this video.
Essentially considering buying on 2% dip is like a SIP because it is a system :) just not monthly.
I am keen to know your thoughts on MF profit booking / redeployment strategy when I am looking down a 15 year roadmap
I recently did a video on profit booking strategies. Pls watch: ruclips.net/video/9GZtVsg9HC8/видео.html
Sir, you video is very very insightful and clears many myths of Sips and Lumpsump investing.
As you said in the conclusion.. That on every 2% Dips.. Add Investment by
Your lupsump.... Amount.
तभी तो मैं कहता हूं कि आप सही पकड़ते हैं.🙏🙏
Thank you. The raw data has been given in the worksheet, please experiment with what works best for you. You can easily change 2% to 3% or 4% etc. The idea here to show the path but you are free to travel on it by any means possible :)
@@shankarnath 👏👏🙏🙏
What is intuitive (invest additional during corrections) is not always suppoorted by long term xirr data. As you rightly conclude.
I maintain a LEO fund (Liquid, Emergency, Opportunities) ... leave it alone @ 7%+ until a sharp dip happens - 2016, 2020, 2023 Mar-Jul etc and buy as much equity as possible. Never did a scientific study but the emotional satisfaction of having utilised the fall is a nice once.
Thanks for sharing
Nice suggestion sir
Most welcome
Shankar, good analysis and very insightful. Three possible scenarios I can think are a) 10k sip + 5k (instead of 15k sip) b) 10k sip +1L annual bonus c) sold a property and has onetime investable funds. In case b) & c) the opportunity cost due to delayed deployment need to be considered. Hence I feel all the trouble may not be worth it?
Thanks for sharing your views
SIP to equity and Lumpsum to dept fund
Hello Shankar Sir, I have been investing lumpsum from 2020 onwards, I followed the NAV whenever I felt the NAV was low and if I had excess amount I have invested & I have got good returns, ofcourse I haven't done any calculation. I feel everyone should invest in dips, atleast we will save more & more unknowingly we will achieve our goals faster than expected. Thanks for your valuable insights.
Thanks for sharing your views.
Infact I am continuing SIP mode and whenever I see market correcting good % then I invest lumpsum as well
Thanks for sharing
Finally found your YT channel. Thanks to YT algorithm. 🥰
Welcome aboard!
From this I feel the best strategy would be to have higher risk appetite in 20s and try to invest sips in higher amounts in small caps. Later in 30s focus on large and midcap, think of changing the sip size based on the financial conditions and responsibilities.
Hi, I have some insight about the XIRR bias. I have done some similar calculations on long term NIFTY TRI data and tried to calculate the XIRR. The problem is with a fixed SIP amount. With a fixed SIP amount the later years get a lower weightage. Imagine investing 10,000 rupees in 2007 vs 2022, and lets say the units you bought in 2007 gave you a 20% return while the units you bought in 2022 gave you a 10% return (both checked till 2023). Obviously you would have 5-10x more units from 2007 as 10,000 rupees would have bought you a lot. So when we average for these two data sets the older 2007 returns will have a massive weightage bias leading to an XIRR closer to 20% instead of an exact mid value of 15%. Try changing the 2022 NAV weight but investing lets say 1,00,000 instead of 10,000 and you would see a huge difference in the XIRR.
So in short it's an SIP "real value" bias. This is especially true for the longer term data sets. Try doing a 10% SIP increase per year for a better result.
Thanks for sharing your views
Agree, combo approach is more effective and remember no crash is coming because of QE magic pill of central banks but 5-10 percent corrections is expected but no crash...QE zindabad.
Thanks for sharing
XIRR will not increase because with lump sum investment you are putting money more than SIP amount and it is being invested for your entire observation period so this will bring XIRR percentage down, and with more frequent investment it might be lesser as well. Thanks
@Shankar, we should also include the percentage of return the lumpsump amount staying FD while they have not invested yet
Thanks for letting me know
Extremely Insightful, assuming all calculations are correct (And I will check that), this will tell me that not doing SIP and waiting for market fall is not worth the effort. Thank you!
Let me know if the calculations are correct once you are done. Thx!
Great stuff. Missing those thumbnails though ;)
Hi Shankar, In shortest possible word, the return depends on time in the market and not timing. The reason behind the low XIRR is maximum amount your are investing in first half of the time horizon.
No one can predict the market and waiting for 2 or 5 % means loosing possible several% of gain in early investment. Max one should do with lumpsum is to divide between several weeks to months (6-12 months max) depends on corpus.
Thanks for sharing your views
Hello sir, your analysis is awesome and the language is also good to understand . This kind of research was done by Mr.Kishore from FIRE IN INDIA RUclips channel. Maybe it will be useful for your research and us also. thanks
Thanks for your appreciation and for letting me know
Yes...pls take help from Mahesh kaushik channel and fire in india work
@@naveen804 thanks for your reply, i can't able to understand the language they used , if u r explaining in English, it will be very useful for South Indian traders. Thanks
Hello sir. Tactical question. When do you execute the lump sum buy? Is it Next day a market order that executes at market open price, since you would the daily candle to close for making that buying decision right?
Hello. I've never put in much thought to candles and intraday prices as my investing is for the long term
Its pretty much clesr they way demonstrated. Though we have not much data to do details analysis
Hi can you recalculate with Nav price downwards when you add lumpsum and check whether xrr changed You are adding lumpum only when nav up how xrr is expected to change Ex sip started at Nav 10 next year nav 8 add lumpsum and again calculate
Hi sir, just sharing my understanding on XIRR.
XIRR indicates the annual rate of return on an entity here we can say the nifty 50 index.
In other words we can say how fast the money is getting compounded.
For ex
If I invest 100rs at an entity which has annual rate of return 10%. After 1st year it will be 110 and after 2nd year it will be 121.. etc.. like this instead of 100 if I have invested 1000 after two years it will be 1210.. the the amount we invest doesn't alter tha rate of returns.. it's more specific to the entity and at which level we started investing and at which level we exited. XIRR is related to the performance of the entity and at which time we entered and exited irrespective of the capital we put.
Hope it helps.. it may not be 100% correct. My point is more capital investment doesn't maximize xirr. But investing at the lowest dip and exiting at peak will surely maximize the rate
Thank you for sharing this, very useful 🙌
Hello Sir, a prudent investor definitely will have the idea of the power of compounding but may not so much about interrupting it over the years. The giants, the likes of Charlie Munger, Warren Buffet and Mohnish Pabrai have spoken a bit on the topic of interrupting and losing out on its benefits. I however am not very clear on ways one can screw with compounding and ways how not to either continue commiting or commit such mistakes in future and would request you to make a video on how one can avoid interrupting compounding or with minimal interruptions make alterations to ones portfolio when situation demands.
Thank you,
Your ardent follower.
Compounding in stocks & equity MF isn't the same as FD though. It's true that one would not want to shake up their portfolio too frequently, but what we are talking about here is tactics to deploy one's cash inflow not to disturb what's gone in, although even that rebalancing from time to time maybe necessary
@@chan625 thats right... and that's why I am requesting a video of a compiled manner of all the ways we may interrupt compounding and how to prevent them👍
On why the numbers aren't moving, I suppose it's because you are calculating the xirr.
Try adding a bigger jump in nav value at a single instance at the starting of the table. Then if you invest 1lac just before that big jump, you would see some nice variations in xirr.
XIRR tries to predict the return rate depending upon individual investments and the investment timings. If you keep the data same and calculate the irr instead, there too you would see some nice variations depending upon the time when you invest the 1 lac.
Thanks for letting me know
Fantastic video
Next video on auto sector analysis sir
Thanks for the suggestion
Another good strategy would be to keep 5000 rs SIP and increase it as per the PE ratio of Nifty50.
>24: no additional sip
22-24: additional 100
21-22: additional 2000
20-21: additional 3000
19-20: additional 4000
< 19: additional 5000 sip
Thx for sharing
Sir
Please advise small cap active fund or small cap index fund is best for investment
Also please throw light on whether small cap gives any advantage over long run when we can invest in mid cap index
Hi Shankar,
Great Video as usual. Have Learnt a lot from your channel and thank you for explaining basics so well.
Considering number of fund houses and types of mutual funds, instead of going through tedious process of selecting and tracking them , believe investing in index fund only that tracks Nifty 50 , NN50, Midcap 150 , Smallcap 250 and Microcap in a proportion that investor is comfortable with via SIP mode, provides a more diversified investment approach.
Of course this cannot beat the market or generate alpha but it provides a more balanced way for novice investors to kick start their investing especially for long term.
Can you please provide your view point on this approach and if possible retrospective historical returns on such an approach.
Thank you.
Thank you very much. I prefer not to set boundaries/constraints around me -- so use a mix of actively-managed and passively-managed funds for further my wealth creation goals. You can know more about it at: ruclips.net/video/bN5QdxY3RVs/видео.html
Hi Sankar, following your vdos for a quite sometime and content you are creating are really grt.. regarding XIRR, i guess we are confusing with more XIRR just because investing more capital during dip but if we imagine not doing SIP during the same time we do lumpsum then our overall XIRR will be higher but in our case we are doing both SIP+Lumpsum so return % should be same for both SIP during same month and lumpsum during same month… believe thats the reason for not having spike in XIRR.
Hello. Maybe, but in the simple example the SIP+Lumpsum optionality was never used so I'm still clueless on why its the case
@@shankarnath hi, in your simple example also you are trying to change amount for jan 1’20 whereas return % of X amount or Y amount invested on Jan 1’20 will always be same right?? If we imagine feb 1’20 is when market dip is 5% and put our Lumpsum then XIRR will be hiked for 2020..
@@ChandraMohan-kl9xt Yes, the NAV doesn't change. Only the amount changes.
@@shankarnath thats my point as well. So we cant expect increased XIRR right? Sorry for dragging this conversation a lot but this will help me to understand better. Thanks for your understanding and reply!!
In your section on 'My XIRR confusion ', the xirr doesnt change when you increase the investment amount in Jan 2020 because the irr for that particular SIP itself is 18.92% (=(20/10)^(1/4)) which is very close to the overall xirr of 18.82%. So even if you increase this particular SIP drastically it can't go beyond 18.92%. its like adding a number to a group of numbers that is very close to the avg of the original group. It wont change the avg of the group.
The only way to see a huge change is by lowering the NAV assumption for that month. Say 5 instead of 10. You will then see a big difference in base case XIRR and xirr with increased amt in 1st SIP.
Thanks for letting me know
When X moves from 10 to 20, it doubled. If its over a period of time, you can get CAGR with XIRR formula... As you can see it doesn't matter what the value of X is. It's still the same percentage.
I have actually divided my monthly investment into weekly + booking profits when market is at ATH, re-invest when market corrects by 3-5% from ATH. I am doing this for past 3 years. I am able to generate a 18% return. Again it is rising market so have to test this during falling market as well. I make profits and it keep it as a corpus to re-invest whenever there are big corrections.
Thanks for sharing
Yearly income below 2.5l
I should to pay tax stcg in mutual funds returns ?
Its not about rate of return, but deploying additional money as lumpsum along with SIPs, for creating bigger corpus.
Yes, that's what I also figured
TLDR:
Lumpsum with mere 5 percent correction won't move the needle, since the returns are extrapolated over a period of time .
Instead try large percent such as 12-20
Long version
The reason being there is no increase in xirr no matter then increase in initial lumpsum amount is because it is calculated on time weigter average.
The difference you were looking for will be shown in terms of absolute return amount
For example,
Lets say
2 person are doing SIP in the same funds, in same time period, both will get the same xirr.
Regardless of their sip amount.
Now instead of 2 person, if only one person does sip with different amount,
Still he will be getting same xirr.
This is the nature and purpose of xirr sir
thats basic thing bro, XIRR or any return percentage doesnt depend on invested amount
That's the true but the confusion arised despite the investment amount was increased in some of the installments, yet the returns remains same,
@@darkhunter882 its not same , but difference margin is very very low
Most of the investors are comfortable with SIP. Managing funds to add lump some when the markets are down could be a difficult proposition for many. Here I have an alternative approach. If one goes for an SIP in equity fund for-long term can think of this following approach. Switch a certain percentage of the accumulated corpus or a fixed amount to a liquid/ debt fund when the market is increase by a certain percentage with in a year. If the market goes down by a certain percentage then switch the predetermined lump some amount from liquid fund to equity fund.
Thanks for sharing. Curious to know - what difficulty do you foresee in buying a few units in a mutual fund as a adhoc purchase? Are these operational issues?
It doesn't matter how much you are investing be it 10k, 10 lacs or 1 rupee, XIRR will be same as it is connected with the time when you invest the same. I would suggest if you stimulate the data on bi-weekly basis, the results would be much better. Take min. 3% DIP in index
Can you show it to me on a worksheet? Pls email at hello@beginnersbuck.com
Good content again. Have you done any study to see a SIP done on particular days of the month gives slightly more returns? I remember, i came across one such conclusion that sip usually done during the last 10 days of the month gives better returns than other days.
Sorry, I haven't done any such study. How much extra % return does SIP in last 10 days offer?
"As soon as you have money to invest, invest it immediately according to your asset allocation"
In my opinion this is the only practical solution for almost everyone
Thanks for sharing your views on this
Dear Sir, I understand the confusion, but I reckon that the difference in XIRR is not much as the underlying instrument is the same. What I mean is that the behaviour of index in SIP and lump sum is the same.You may try to evaluate the same by choosing just 1 stock , I am sure you will find the same behaviour. You have to choose an active approach to see the difference.One can choose to create a basket of same stocks however on a dip take concentrated bets.
Thanks for letting me know
Thanks for the video.
Yes, you won't see a difference if you calculate the XIRR on the combination of SIP and Lumpsum, but a key logic is missing here. It's advisable to calculate the XIRR for SIP and Lumpsum separately. Then we will realise the benefit of SIP+Lumpsum investment. This is because you haven't allocated the same timeframe to the Lumpsum amount as you did for the SIP. Additionally, you had the opportunity to utilize the Lumpsum amount for other potential benefits. Even if it was just a Fixed Deposit (FD), it could have earned some interest. I hope this explanation makes sense. If not, please let me know. Thanks!
Thanks for letting me know
Pothuranjith ji
Want to say about pledged money of the lumpsump amount???
& Invest it in fd for more roi??
Very insightful video. Generally when ever I order mutual finds through discounted broker apps, it takes 2-3 days deliver . how to take advantage of market fall with lumpsum + SIP strategy. Please suggest.
Thanks. Pls use ETF for real market price
Being a distributor, i have been running the SIP+Lumpsum method for years, yet i haven't been able to know why XIRR behaves exactly you demonstrated. I have talked to industry folks and they have no clue. Do let me know if you get to know the cause.
Sure, I'll update via a community post if I get the answer to this
Hello @Shankanath sir,
What about SIP + Lumpsum as per market mood index(ticker tap). lumpsum investment in fear Mode.
Sorry I haven't tried it. If you have some research on the same, please do share.
@@shankarnathit's a new system by ticker tape called MMI, market mood index
I have a question. If I have to do lumpsum investments in index funds through mutual funds route, how do I proceed about it? I ask this because i see a lag in market movement and the mutual funds movement. For example, if market nifty 50 corrects by 2% today, I generally see the mutual fund for nifity fifty index correcting by 2% after a day or two. In such a case, on which day exactly should I put my lumpsum in the mutual fund index?
You can use an ETF instead
Sir as usual again wonderful thinking. Question from my side how does it work if we do a SIP on a daily basis. Does it improve the CAGR?
Daily SIP has already been analyses and found not useful. A simple monthly is as good if not better (fewer transactions)
Kindly watch this short video: ruclips.net/video/FVVuA5BQcO0/видео.html