The Hundred
In the investing world, when everyone is wondering how to tackle the volatility and when to enter into the stock market, what is the probability of making or losing money in the stock market, etc? Our study says ‘a hundred-month SIP’ has always given a positive outcome.
Yes, that’s true.
If you are agreeing that market-related instruments are the way to go to make inflation plus returns, our research lens helped us to know that at any given point you enter into the stock market through SIP and continue to invest for 100 months, you would have ended on the positive side in the past.
Obviously, no one can predict the future market growths and the past performance of the mutual funds is not necessarily indicative of the future performance of the schemes.
In our study, we pulled out the SENSEX data from Jan-2001 and given the facts below:
Data points for the analysis
| Period Considered | Jan-2001 to Jun-2021 |
| Total no. of months involved | 246 months |
| SIPs with 100 months completed | 146 months |
| Sensex on Jan-2001 (beginning of Jan) | 3972.12 |
| Sensex on Jun-2021 (end of Jun) | 52482.71 |
| First 100th month completes in | Apr-09 |
Decoding the chart and data points:
If you had invested at any point during the last 20 years and continued the SIP for about 100 months, then the annualized returns every 100th month you make are given in the graph.
That is, if you started your SIP in Jan-2001 and continued for 100 months (till April 2009), by May-2009, your returns would have been 21.56% per annum. Similarly, if you had started your SIP in Feb 2013 and continued for 100 months, (till May 2021), by June 2021, your returns would have been 13.47%.
Our analysis says if you had started a SIP anytime from 2001, you would have ended up on a positive note.
Summarizing the actual numbers:
Return Probability in %
| Range | <0% | 0%-5% | 5% to 10% | 11% to 20% | >20% |
| No. of times occurred | 0 | 2 | 49 | 75 | 20 |
| in % | 0 | 1% | 34% | 51% | 14% |
Return Chart (p.a)
| Average | Maximum | Minimum |
| 12.20% | 24.15% | 3.14% |
We also did an analysis on the actual performance of the scheme in any 100-month SIP during the last 20 years. Since there are only a handful of funds in each category that have a track record of 20 years, we pulled out few funds and the outcome is: (Considered SIP rolling returns for arriving at the calculation).
*Period Considered Jan-2001 to Jun-2021
Obviously, neither we are suggesting to go for a fund with 20 year track record nor the above funds. The take-away point is here is that, either the index or the actual funds, a 100-month SIP have always delivered superior returns.
So, if you are a long-term investor, the opportunity to make good returns are high.
Investing as per the risk-appetite, duration of investment and the objective is mandatory. There are no compromises on it.