New Delhi, March 17 (NationPress) Investors who initiate a systematic investment plan (SIP) close to market peaks might generate more wealth compared to those who hold off until a market decline, as revealed by a recent report on Monday.

This insight challenges the prevalent notion that investing during market lows is the best strategy for financial gains.

A study by ValueMetrics examined the historical performance of the Nifty Smallcap 250 Index over the past two decades, emphasizing market cycles where the index dropped by over 15 percent.

The research contrasted two categories of investors: those who commence SIPs at market highs and those who wait for a downturn to begin their investments.

Unexpectedly, the findings indicated that investors who participated at market peaks frequently accrued more absolute wealth in the long term, despite those who invested at the bottom achieving marginally higher percentage returns.

For instance, an investor who initiated a monthly SIP of Rs 10,000 in January 2008, just prior to a 76 percent market decline, would have invested Rs 20.7 lakh by March 2025 and amassed Rs 91.5 lakh.

This was realized with an extended internal rate of return (XIRR) of 15.6 percent, according to the report.

Conversely, an investor who waited for the market to reach its lowest point and began investing in March 2009 would have invested Rs 19.2 lakh, resulting in a total of Rs 78.3 lakh, even though they enjoyed a slightly higher XIRR of 15.9 percent.

The report is timely, given the ongoing discussion regarding SIP investments during market fluctuations.

As per the ValueMetrics report, delaying for an optimal entry point could result in missed opportunities, whereas consistent investments—even during market peaks—can lead to significant wealth accumulation over time.

Additionally, a recent report from the Association of Mutual Funds in India (AMFI) indicated a robust increase in SIP contributions for the financial year 2024-25, totaling Rs 2,63,426 crore (April-February).