SIP or stop? What smart investors should do in 2025's market volatility
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Q. Let's begin with Trump's move. The U.S. has imposed a 25% tariff on Indian imports. Do you see this as an alarm or an opportunity for SIP investors?
Chirag Muni: While the 25% tariff sounds severe, markets haven't reacted sharply, partly because there's still a lack of clarity. The market did open lower but recovered quickly, possibly also due to the monthly expiry. In the long term, India's macroeconomic fundamentals remain strong. Our export dependency on the U.S. isn't significant enough to cause a massive dent. Preliminary estimates suggest that the GDP impact may be around 0.2%–0.3% if the full tariffs are enforced.Also, there are talks of penalties related to India's continued imports of Russian oil, but these are still unconfirmed. Overall, from a 3–5 year perspective, India's outlook remains positive. So, market dips should be seen as an opportunity rather than a reason to panic. It's a good time to accumulate on dips.Q. Some investors are panicking and considering redeeming mutual fund investments. Should they hold or exit? And what about continuing their SIPs?
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Chirag Muni: If you're already invested, stay put. Rebalance only if your equity exposure is above 75–80%. If you're between 60–70%, there's little reason to worry.
As for SIPs — absolutely continue. SIPs work because of rupee cost averaging. When markets fall, you get more units; when markets rise, fewer. This naturally reduces your average cost per unit.
ADVERTISEMENT For example, let's say you started an SIP in January investing ₹10,000 monthly. If the NAV fluctuated between ₹9 and ₹13, your average cost would still be favorable compared to investing a lump sum at a peak.Q. Should new investors start an SIP now or wait for a dip?
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Chirag Muni: Timing the market is tough. We did a study over the past 25 years, even if someone invested at the peak of each month, they earned ~11.19% returns. Those who invested at monthly lows got ~12.65%, and a disciplined mid-month investor earned ~11.84%.So, the difference isn't significant. If you have investable surplus, start now. Waiting rarely helps in the long run.
ADVERTISEMENT Q. What's your view on step-up SIPs in the current environment?
Chirag Muni: Step-up SIPs are incredibly effective and often underutilized. Let's say a 25-year-old starts a ₹5,000 SIP and continues for 35 years — they might build a corpus of ₹3.5 crore. But if they increase the SIP by 10% annually, the corpus could grow to ₹9.4 crore! Even a ₹25,000 SIP can become ₹17.5 crore over 35 years, but with a 10% annual step-up, that corpus can grow to ₹47 crore. So yes, step-up SIPs are a powerful way to grow wealth over time.Q. Investors often wonder... which date of the month is best for SIPs?
Chirag Muni: We looked at 25 years of data and tested SIPs started on every date of the month. The return difference between the best and worst-performing dates was just 0.15%. So, the date doesn't matter. What matters is consistency. Pick a date you're comfortable with and stick to it. Q. Do SIPs outperform lump sum investments?
Chirag Muni: Yes, especially in volatile markets. In 20 out of 24 calendar years, SIPs offered a better average entry cost than lump sum investing. Over the last 10 years, SIPs outperformed lump sum in 90% of cases. Rupee cost averaging helps navigate volatility effectively — making SIPs the better choice for most retail investors.Q. What's an ideal investment horizon for SIPs?
Chirag Muni: A minimum of 3–4 years is essential. Over three years, 90% of SIPs deliver positive returns. If you hold for five years, the probability of 10%+ returns goes up to 85%. For 15 years, it becomes 95%. Also, even if the first year shows negative returns, holding on for three more years often delivers 11–12% CAGR. So patience and discipline are key.Q. Given current domestic and global uncertainty, should investors review or rebalance their SIPs?
Chirag Muni: Absolutely. While SIPs are automated, reviewing your portfolio annually is important. Evaluate scheme performance, asset allocation, and market cap exposure. If a scheme underperforms for a long time or your allocation becomes skewed, consider rebalancing. Regular monitoring is essential for long-term success. Q. Where should SIP investors focus: large, mid, or smallcap funds?
Chirag Muni: Largecaps are less volatile, but mid and smallcaps offer higher return potential over longer horizons. From 2014 to 2024: Largecap (Nifty 100): Avg return ~12.6%
Avg return ~12.6% Midcap: Avg return ~16.8%
Avg return ~16.8% Smallcap: Avg return ~14% If you have a 5+ year horizon, a higher allocation to mid and smallcaps can make sense. Diversify across market caps for balanced growth.Q. What's a good market cap allocation mix for current conditions?
Chirag Muni: Right now, a balanced allocation could be: Largecap: 55%
55% Midcap: 22–23%
22–23% Smallcap: ~20% This mix offers relative stability with growth potential.
Disclaimer: Recommendations, suggestions, views and opinions given by the experts/brokerages do not represent the views of Economic Times.
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From Russia…
Washington is no slouch when it comes to buying from Moscow. So what's India doing wrong When Russia annexed Ukraine's Crimea region in 2014, US punished it with sanctions. US-Russia trade, which was worth over $38bn in 2013, slipped to under $35bn in 2014, $23bn in 2015, less than $20bn in 2016, and then started rising again from 2017, although Crimea remained with Russia. What changed was that Obama left White House and Trump came in. In 2021, the last year before Putin invaded Ukraine wholesale, Russian exports to US amounted to $29.6bn – almost the same as in 2012. This recap is important when Trump is threatening to make an example of India with 'substantially' higher tariffs for buying Russian oil. The same Trump who, in Feb, said Ukraine 'should have never started' the war. Look at Europe, too. EU's own data shows it supplied 10.3% of Russian imports last year, and bought 7.3% of its exports. Total goods trade between the 'virtuous' and the sanctioned amounted to a not insignificant $78bn – much more than the $69bn India-Russia bilateral trade last year. And data from the nonprofit CREA shows EU's spending on Russian energy last year – $25.3bn – was more than its financial assistance to Ukraine – $21.6bn. That's why the West's moral grandstanding on the Ukraine war fails to convince. For Trump officials to accuse India of financing Putin's war, while ignoring EU's Russia trade, and America's own $3bn worth of Russian imports, is nothing but hypocrisy. How is it kosher for US to continue buying enriched uranium from a sanctioned Russia to meet its energy needs, while frowning upon India's purchase of Russian oil to fuel its growing economy? MEA spokesperson Randhir Jaiswal pointed out in a tweet on Monday that US had nudged India to buy more Russian oil at the start of the war 'for strengthening global energy markets' stability'. Europe was the biggest buyer of Russian oil and gas then, and for it to take a righteous stand, 'traditional supplies were diverted to Europe'. India at that time sourced less than 1% of crude from Russia. By making the switch, it spared the world an inflationary wave so soon after the pandemic. As things stand, India's saving not more than $2bn a year by buying discounted Russian oil. It can pivot to West Asian suppliers again, but everybody – including US – will then feel inflationary pain. Trump shouldn't forget that while trying to armtwist India into a trade deal. Facebook Twitter Linkedin Email This piece appeared as an editorial opinion in the print edition of The Times of India.
