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Amit Trivedi explains how he deals with clients who experience anxiety over short-term low returns from SIPs as compared to FDs. He begins by explaining that SIP is a process of investing whereas FD is a product, which makes it unfair to compare the two. A product can be purchased but for a process, you have to go through a set of steps which require a discipline.

SIPs are beneficial not only because of the returns they promise in the long run but also for the following reasons :

• SIP is an automated process which cuts out the stress of having to make investment decisions every month with your savings. Psychology suggests a positive correlation between the number of decisions one has to make and the likelihood of making mistakes
• SIP forces a discipline. When you look back two years and notice low or no returns, it is important to assess the likelihood of that money being consistently put aside every month and accumulated if not for SIPs

As the popular saying goes “Every drop makes an ocean”, SIPs exhibit it.