Investors who experience a weak or negative start with their systematic investment plan (SIP) are not necessarily headed for poor long-term outcomes. A long-running analysis using the Nifty 500 Total Return Index (TRI) data suggests that many SIPs begin with losses but recover strongly over time.
What the data indicate
- Among SIPs that recorded negative returns in the first two years, about 69% went on to deliver double-digit annualised returns by year five.
- In all the observed cases, none of the SIPs remained negative by year five.
Understanding the index and methodology
The Nifty 500 TRI is a total-return benchmark that accounts for price movements and dividends, reflecting a broader view of equity market performance. The study analyzed two decades of SIP activity tied to this index, looking specifically at performance in year two and year five to understand how early underperformance could influence longer horizons.
Practical implications for investors
- Don’t rush to exit after a weak two-year period—historical patterns show many SIPs recover over time.
- A five-year horizon or longer may improve the odds of achieving meaningful, positive returns.
- Maintain disciplined investing aligned with risk tolerance and financial goals, rather than reacting to short-term volatility.
Note: The findings reflect historical data from the Nifty 500 TRI and may not guarantee future results. Investors should consider their own circumstances and seek professional guidance if needed.