When the stock market has made little or no movement over a period of time, we call it a flat market. Over the last year, the benchmark Nifty 50 has practically given zero returns though the broader market has seen a severe price correction.
A flat market with high volatility is frustrating and causes anxiety & disappointment resulting in investors losing interest. Enthusiasm for investments starts to diminish and sentiments take a hit. Many investors stop their SIP
Actually, a condition where markets are flat is a great boon for systematic investments as we get more units for the same amount of money as compared to a rising market. A falling market is even better.
Let’s understand this with an example
Case 1: SIP in a flat market environment continuously for four years
Case 2: SIP in a rising market environment continuously for four years
Key Take Aways
- Market performance is non-linear, and the volatility, though nerve-wracking, always provides an excellent opportunity to invest.
- Continue with your systematic investments (SIP or STP) during prevailing market conditions, as patience is the virtue of wealth creation