SIP lessons from traditional wisdom

India is entering the final stretch of the festive season. The symbolic victory of light over darkness is behind us; the wedding calendar is in full flow; preparations for Christmas and the New Year have begun. Financial markets, too, seem to have moved past a despondent summer, supported by improving global liquidity, softer inflation prints, and resilient domestic earnings.

This period also offers a moment for reflection. Every year, I revisit the legend of Rāma as narrated by Goswami Tulsidas in the Ramcharit Manas—not as mythology, but as behavioural wisdom. Hidden in its verses are principles that map surprisingly well to the discipline of Systematic Investment Plans (SIPs), especially for household investors.

The two lessons below may be familiar to regular readers, but they remain worth revisiting.

When to start SIP and how long to continue it

सम प्रकास तम पाख दुहुँ नाम भेद बिधि कीन्ह।
ससि सोषक पोषक समुझि जग जस अपजस दीन्ह।।

Tulsidas reminds us that light and darkness are equal in the waxing (Shukla Paksha) and waning (Krishna Paksha) phases of the moon. Yet society attaches meaning to these phases—one perceived as auspicious, the other as inauspicious.

Market cycles follow a similar rhythm. Prices rise, correct, consolidate and rise again—rarely in a straight line. Over long enough horizons, cycles compress into a trend; but in the short term, their emotional impact can be disproportionate.

For SIP investors, these oscillations are not an obstacle; they are the mechanism through which rupee-cost averaging works.

Your average purchase price eventually reflects both rising and falling markets, much like the moonlight that appears different despite being inherently balanced.

The key is simple:

·         Start early, because more cycles mean more averaging.

·         Continue consistently, because interruptions dilute the benefit.

·         Welcome temporary declines, as they lower long-term acquisition cost.

Where to do SIP

Investors often ask which asset is best suited for SIPs: an index fund, an ETF, or a diversified combination of large-cap, flexicap, midcap and small-cap strategies.

Tulsidas offers two metaphors that shed light on this question.

गगन चढ़इ रज पवन प्रसंगा।
कीचहिं मिलइ नीच जल संगा।।

A dust particle, when lifted by gentle winds, rises to the sky. The same particle, when carried by dirty, downward-flowing water, turns into filth.

सुरसरि जल कृत बारुनि जाना।
कबहुँ न संत करहिं तेहि पाना।।

Even when sacred water (Ganga Jal) is mixed with intoxicants, the wise refrain from consuming it.

These verses translate into two practical investment rules:

(a)   Choose Progressive Assets, Not Downward Currents

SIP behaviour works best with assets that possess:

·         sustainable cash flows,

·         sensible valuations,

·         healthy balance sheets, and

·         a structural growth runway.

Think of these as gentle winds. They may not deliver bursts of abnormal returns, but they compound steadily.

Low-quality, high-volatility assets—narratives without fundamentals, over-leveraged businesses, momentum-driven pockets—are the downward currents. They may rise briefly but rarely sustain wealth creation across cycles.

(b)   The Asset Manager Matters as Much as the Asset

A fundamentally sound asset in the hands of an undisciplined or style-drifting fund manager can become a source of needless volatility.

SIP investors should look for:

·         consistency of process,

·         risk discipline,

·         reasonable portfolio turnover, and

·         alignment with mandate.

The Ramayana conveys in metaphor what markets teach through experience:

The discipline to continue and the discernment to choose the right companions.

For SIP investors, these are the two non-negotiable pillars.

Start early. Continue through cycles. Choose assets that behave like gentle winds and managers who keep them that way.

Everything else is noise.

 

Tomorrow, I shall share my views on how long a SIP should be planned and continued.