Best Market Timer Vs Worst Market Timer Vs SIP Investor of Nifty – Who is the winner?

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Among Best Market Timer Vs Worst Market Timer Vs SIP Investor of Nifty Index, who is the WINNER? We all wish to invest only when the market is low and we all wish to withdraw only when the market is high. However, timing the market is impossible even for the GOD also. But still, as a human, we try to be accurate. Hence, let us see who is the winner among Best Market Timer Vs Worst Market Timer Vs SIP Investor of Nifty 50 TRI.

Best Market Timer Vs Worst Market Timer Vs SIP Investor of Nifty – Who is the winner?

For experimenting purposes, I took the Nifty 50 TRI data from Jan 2003 to Sep 2021. It is almost around 18 years of data. In this, I got around 4500 dates and respective Nifty 50 TRI Index Values.

Let us take the example of Mr.A. He will invest Rs.1,000 every month only when the market is all-time high during that particular month. Same way, Mr.B will invest Rs.1,000 every month only when the market is all-time low during that particular month.

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Both Mr.A and Mr.B are market timers and they invest exactly when the market is down and up during those particular months from Jan 2003 to Sept 2021.

However, I took one more example of a person Mr.X who invest on the 5th of every month without bothering the market’s all-time highs and lows.

After plotting all of these three guys’ data for the last 18 years, the graph looked like it below.

Best Market Timer Vs Worst Market Timer Vs SIP Investor

The final values of SIPs as on 30th September 2021 for Mr.A is Rs.10,61,612, for Mr.B is Rs.11,57,4355 and for Mr.X is Rs.10,98,311. Obviously, you may say that the person (Mr.B) who invested only during the monthly low generated higher returns. Because the return difference is Rs.95,823. However, if we calculate the XIRR of all these three investors, the results are as below.

Mr.A’s XIRR is 14.9%

Mr.B’s XIRR is 15.6%

Mr.X’s XIRR is 15.04%.

It is easy to look at history and show that one is investing at low and at high. However, the real-life is entirely different. As I told you above, even GOD can’t predict the exact market highs and lows. Even if someone is trying to predict 100%, you noticed that the results of the last 18 years are in front of you.

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Few may question why the 18 years data and why not beyond that? The Nifty 50 TRI data is available for me from 2003. Hence, I calculated from that period. Regarding the selection of 5th as the date of SIP for Mr.X is also random and there is no logic to select this particular date.

The purpose of this post is to highlight that NONE can time the market perfectly. Instead, use equity for your long-term goals with proper asset allocation by investing CONSISTENTLY. After looking at this past 18 years’ data, what you have to follow is – AVOID NOISE, BE CONSISTENT and MANAGE RISK at your level.

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Basu Nivesh

Basu Nivesh

Basav is a SEBI Registered Investment Adviser (SEBI RIA) practicing the Fee-Only Financial Planning Service. He is a CFP (Certified Financial Planner) and blogger at Basu Nivesh. He services around 300+ satisfied clients.
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