The phase of turmoil continues in the stock market, with a significant rise one day and a sharp fall the next. As a result, stock market investors are facing huge losses. Mutual fund investors are also not untouched by this decline, experiencing a major correction in their portfolios. In such a situation, if you invest in mutual funds through SIP, it’s important to understand Trigger SIP. Simple SIPs alone may no longer be enough. Let’s explore what Trigger SIP is and its benefits.
What is Trigger SIP?
Trigger SIP is a strategy that helps investors get better returns by using stock market corrections. Simply put, when the market falls by 5% or 10% because of bad news, Trigger SIP lets investors invest extra money. The advantage is that when the market falls, the price of units decreases. By buying more units during these times, investors can lower their average cost, which can lead to higher returns in the long run. However, this strategy works best for investors who keep an eye on the market.
How Does Trigger SIP Work?
In Trigger SIP, you set a trigger point. When the market or a specific stock reaches that point (for example, a 5% fall), the SIP will automatically increase the investment. This helps investors take advantage of market drops without manually changing their SIP.
Benefits of Trigger SIP
- Better Returns During Market Drops: Trigger SIP helps you buy more units when the market is low, lowering your average cost and improving returns over time.
- Automatic Increase in Investment: Trigger SIP automatically raises your investment when the market hits your trigger point, so you don’t have to adjust it manually.
- Reduced Risk in a Volatile Market: By investing when the market is down, you reduce the risk of buying at high prices and can benefit when the market bounces back.
How Investors Benefit from Trigger SIP
Let’s look at two investors: Investor A and Investor B. Both start investing Rs 10,000 monthly at age 25. After 25 years, Investor B, who used a 10% step-up in their SIP, has a corpus of Rs 4.27 crore, which is Rs 2.4 crore more than Investor A, who followed regular SIP. Investor B’s profit is 90% higher than Investor A’s.
If Investor B had used Trigger SIP, the amount would have been even higher. This shows that just SIP isn’t enough anymore; you need to step up SIP and Trigger SIP for better returns.
Why SIP Alone Is Not Enough
In a fluctuating stock market, regular SIPs may not make the most of market drops. Trigger SIP helps you automatically invest during market falls, giving you a chance for better returns in the long run.
Trigger SIP vs Regular SIP: Which One Should You Choose?
While regular SIP is a steady way to invest, Trigger SIP lets you adjust based on market conditions. If you keep an eye on the market and want to invest during drops, Trigger SIP is a better choice to improve your returns.
To get better returns, consider switching from regular SIP to Trigger SIP, especially in a volatile market. This way, you can reduce risks and grow your investments more effectively.
Disclaimer: For any financial investment anywhere on your responsibility, Times Bull will not be responsible for it.
Avijit Das
A sports journalist driven by passion and dedication, I seamlessly blend my love for writing and sports. Currently with Timesbull, I have honed my craft at Sportskeeda, Cricreads, and Athlete Fortune. I live and breathe sports—whether it's football, cricket, cards, or chess, I'm always up for a challenge. A die-hard...
