What an amazing question. Give me enough data and time, I can torture the data enough to tell you how you can lose money in SIP as well as how SIP can make you a millionaire, OTHER CONDITIONS REMAINING SAME.

If you had sold at every peak (weekly) and bought at every bottom (obviously weekly) you would have got about 4500% return from the year 1979 to 2015. If you had done a SIP in an index fund with reinvestment of all dividends and a 0.75% amc you would have got about 26% return. If you had done …..blah blah.

Since I do not know anybody who knows anybody who knows anybody who got 4500% return, let us think of that as a dream.

Over long periods of time SIP should work, not because of what the market does but because of what an investor does. Let me be frank, I bought shares and continue to buy and sell them NOT AS A SIP. I kept buying Essel Propack from Rs. 18 to Rs. 90 or thereabouts. I also keep selling and buying back. I reinvest / do not reinvest the dividends always. I have been earning more than my needs and hence the excess has been going into equities. Yes a well thought of equity portfolio. Yes I have ignored most of the media noises about market timing.

However for 99% of the people reading this blog SIP will work 99% of the time. Let us see what else can happen?

1. If the investor keeps removing money for some reason or the other
2. If the investor reads too many blogs and keeps tinkering with the SIP
3. If he does a stop start kind of investing
4. If he believes that because SUBRA did not do SIP he too should not do
5. If he believes he can time the market based on PE, interest rates, growth rates, etc.
6. If he believes that there are short cuts in equity investing
7. If he thinks that he can move from asset class to asset class on some logical / mathematical basis
8. If the reads the pink papers who show him how on the basis of ‘sensible’ PE he could have altered asset allocation
9. If he believes that he can without much effort create a great looking portfolio
10. If he believes that portfolio management is pure science
11. If he believes that portfolio management is pure art
12. If he believes that the process is more important and the FUND MANAGER IS IRRELEVANT IN ANY FUND.

You really do not need more than a dozen reasons, right?

Also if you find an article which says “a lumpusum would have earned better than a SIP” AND believe that, let me add, I agree. However that is a perma bull market statement. If in a sliding market if you do review your portfolio, you wil realize that your loss would have been lower if you had done s SIP. Excellent bull market views do not work in a bear market.

Ask yourself honestly do you wish to take time off your hobbies (do not look at some of us we have nothing else to do in life. Nothing interesting I mean). Does it interest you to sit with data, with books on investing, surf through financial porn looking for what to read and what not to read. Looking for nuggets which are relevant. Understanding the scepticism of a Taleb and the optimism of a Buffett. Understanding the compulsions of the politicians and the media.

Knowing what is good for you and when and knowing that an asset allocation that was amazing from 2002 to 2007 was a disaster in 2008. Knowing that asset allocation can work only if the competing assets give comparable return %ages. That asset allocation is done to REDUCE LOSSES and not to improve returns.

As long as you realize that Phil Fisher, Graham, Buffett, Soros, John Templeton, Bogle, Vallabh Bhansali, Deepak Parekh, Uday Kotak, Mukesh Ambani …did not need to copy and could still be successful, chart your own path. That will work. God bless….

Well, till then do your SIP. The day you realize how Direct investing in equities is better than SIP………you can decide what to do in life