Balancing Risk & Return- SIP in stocks

The general perception is that investing in stock markets is very risky. there are two aspects which go into investment in stocks. Firstly choosing the right stocks & secondly purchasing the stocks at the right time. We may choose some tried and tested blue chip stocks or analyse a Company & decide to invest in that business. The most difficult aspect of investing would be to time your purchase. Time and again we have seen that after we purchase a stock there is a decline in markets leading to a fall in share price. One way of negating the risk of timing your purchase is to invest in a staggered manner. Once we decide on the stock to invest in, we can do a SIP in the stock, invest in a systematic monthly installment just like an SIP in mutual funds. Just like there are no short cuts in life , there are no short cuts in investing. The best & safest way to invest is to accumulate it slowly and steadily. Just as the tortoise says- slow but steady wins the race. Lastly stock investments should always be done with a long term perspective and stocks should be bought with the mindset as if you are buying into the business.

Find below a table of monthly systematic investment in some stocks till the end of January 2017. I have selected a few stocks which I like:

Rs.5000 invested every month has grown to…
1 year
3 years
5 years
Amount Invested (Rs.)
60000
180000
300000
Stock
  
Bharat Electronics Ltd
Amount
73937
331175
785579
SIP Return
40%
42%
39%
HCC Ltd
Amount
108504
318604
669812
SIP Return
151%
39%
32%
ITC Ltd
Amount
66693
202910
367710
SIP Return
19%
8%
8%
Motherson Sumi Systems Ltd
Amount
71218
239115
814710
SIP Return
32%
19%
40%
SRF Ltd
Amount
73321
390479
1463019
SIP Return
38%
55%
66%
SBI
Amount
74354
206271
366438
SIP Return
41%
9%
8%
L&T
Amount
64784
181396
368550
SIP Return
13%
0%
8%
SAIL
Amount
84077
199674
307773
SIP Return
71%
7%
1%
Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata.He also manages a portfolio on the online platform Kristal. Find link to the strategy named ‘The Tortoise’ 

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