Systematic Investment Plans (SIPs) are always very well sold on the grounds that you cannot time the market and investment in it helps to average costs in a falling market.

In the table above, you will see that the average by taking the index at the start of the month was around 27,554 points,. Today, the index is around 25,200 points, thus investors have certainly bought at higher prices on an average.

If you would invest a lump sum today, when the index is at 25,200 points, you would be much better off, than the SIP. Remember, you have to also calculate interest cost, which you would have got in a recurring deposit at a bank.

So, in Dec, you would probably have lost money in SIPs, particularly, if they were large cap oriented SIPs.

Now, if the markets fall further, you are likely to lose further. Because remember, for quite a few months, the Sensex was in the 29,000 and 28,000 points. You have been buying higher. So, to recover the money that you lost in 2015, the Sensex has to really rally higher and faster to probably 29,000 points to 30,000 points.

By the time it does that probably by the end of 2016, you would have had two years gone, which means, you could should have really received 18 per cent returns, considering that at the start of 2015 interest rates were near 9 per cent in bank deposits.

The theory that you average your cost in SIP is really a theory that can easily be debunked. In today's market, timing is as crucial as averaging. If you enter the markets at peaks, you may take years to recover your money.

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