Read it here only. Our venerable financial media is sure and convinced that

a) all ulips are terrible and bad and

b) SIP is the new Amrut. Even an excess cannot be bad

c) SIP is the solution to every problem in life.

Let me now tell you when SIP will NOT WORK:

• In the short run (read less than 5 years)SIP may or may NOT give you good returns
• If you mindlessly do 10 sips of Rs. 2000 each, you will UNDER PERFORM the index
• If YOU panic when the market goes down and bail out, SIP will look idiotic
• If you want money in Sep 2017 and keep doing SIP till August, HOPING to withdraw in Sep, you will cry
• If you think direct equity is risky and SIP is risk free, you know a shit about risk
• If you think SIP is a sure shot for 20% returns you are up s….creek
• If your IFA promised you 20% return in SIP he is a fraud, he is being celebrated, and you will pay the bill
• If your IFA is smartly reduced your expectations from 20 to 18 to 15 to 14, he is smart, you are dumb
• 140 pages is what you need to read to get better than your IFA, do it.
• If  SIP grows at the same rate for the next 5 years we will be collecting Rs. 16000 crores per month
• There is no clue what AMCs are doing to train the fund managers to handle Rs. 20 crores of cash INFLOW a day
• Right now 450 schemes are chasing 125 companies and their PE is in the sky

So your LOGICAL question is: Subra should we STOP our SIP?

The answer is a resounding NO. Repeat No. However, you should do the following:

• Expect to get returns as follows: G sec + 25% premium i.e. 6.4%+1.6% = 8% for the SIP
• Assume that you will get about 7% TAXABLE in debt funds with short duration
• Be ready for lesser current yield in debt funds, and not much of portfolio valuation gains
• If your IFA says 18% returns in some funds are possible, I can bet he has NO ability to spot that fund
• Some mutual funds – equity – will give great returns, but you may not have enough money in those funds, be contended
• By definition governments are greedy. Expect Income tax on equity, and Estate duty to be imposed in 2020
• 2018 will be an awesome budget, equity markets could boom, SIP could peak, and 2020 will be HARD budget
• The SIP story is a typical BFSI story. When we were narrating it in 1999 nobody believed us.
• Like all stories it has gone through disbelief, anger, surprise, stun, OMG I missed it and super peak
• It is a brilliant concept but will require patience. Ha, God made patience in small quantity.
• Some old people like us are sitting on tons of patience,

SIP cannot create wealth fast. It can create wealth slowly.

Remember Sai Baba’s statue in Shirdi? Remember Shraddha and Saburi? Ditto for equity markets.

BTW, I have an ULIP which has given me about 19% CAGR over the past 14 years. Not bad I can assure you.