Navigating Volatility: Smart Strategies for Investing ₹25,000 through Systematic Investment Plans

Market Volatility and Investment Strategies

Key Figures:

• ₹25,000: monthly SIP amount
• 9%: decline in Sensex from its record high
• 35%: decline in silver prices from its peak
• 15%: decline in gold prices from its peak
• $80: current global crude oil price per barrel

Investment Strategies in Volatile Markets

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In the face of market volatility, investors are left wondering whether to pause or continue with their systematic investment plans (SIPs). Experts suggest a balanced approach to navigating the uncertainties.

20:80 Split Approach

Seemant Shukla, CEO of Quantum AMC, recommends allocating 20% of the ₹25,000 monthly SIP amount to gold via gold savings funds or Gold ETFs. The remaining 80% should be invested in equities, focusing on a diversified equity fund that invests across large-, mid-, and small-cap stocks.

Balanced Approach

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Darshan Rathod, COO of Multify, suggests allocating 60-65% to equities, with a large-cap index fund as the core and a flexi-cap or next-50 fund for growth potential. 20% can be allocated to gold, which acts as insurance against global tensions and rupee weakness. The remaining 15-20% should be allocated to debt or liquid funds.

Increased Exposure to Gold

Archit Doshi, Senior Vice President of PL (Prabhudas Lilladher) AMC, recommends increasing exposure to gold to 20-25% amid heightened geopolitical uncertainties. This barbell approach ensures the portfolio captures long-term equity growth while utilizing gold to absorb immediate inflationary and geopolitical shocks.

Rupee Cost Averaging

The current volatility allows the fixed SIP amount to acquire mutual fund or ETF units at significantly lower net asset values (NAVs) through the mathematical advantage of rupee cost averaging. Doshi recommends incorporating an annual step-up strategy of 10% to the ₹25,000 base to exponentially enhance the terminal corpus.

Sector Rotation

Doshi recommends investing in upstream energy (ONGC, Oil India), defence, and healthcare, which may offer high earnings visibility and insulation from imported inflation. For gold, Doshi recommends choosing gold ETFs over physical gold for financial allocation due to their liquidity, market-linked prices, and regulatory benefits.