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INR3,000-Per-Month SIP Outperforms Hot-Stock Strategy Over 15 Years
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Published in Stocks and Investing on Tuesday, November 25th 2025 at 10:53 GMT by Business Today- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
How a Simple ₹3,000‑per‑Month SIP Beats the Hype‑Driven “Hot‑Stock” Strategy
The headline‑grabbing mantra of every market‑loving headline—“Buy the hot stock” or “Invest in the next multibagger”—is still the most tempting way to grow wealth in a bullish India. The Business Today article, “Sip vs hot stocks: How a simple ₹3,000 plan outperforms high‑flying market favourites multibaggers,” challenges this conventional wisdom by showing how a disciplined, low‑cost systematic investment plan (SIP) can deliver stronger long‑term results than a one‑off, high‑risk play.
1. The Premise: SIP vs. “Hot‑Stocks”
The article opens with a quick primer on SIPs, linking to a Business Today guide on “How SIPs Work” that explains the mechanics: a fixed amount is automatically invested into a chosen mutual fund (equity, hybrid, or debt) on a pre‑selected day each month. This strategy relies on rupee‑cost averaging—buying more units when prices are low, fewer when prices are high—thereby smoothing out market volatility.
In contrast, the “hot‑stock” approach, the article notes, hinges on picking one or two “favourite” companies that have recently posted spectacular earnings or ride a favourable trend. The risk is concentrated: if the selected stocks underperform or get hit by a sector‑specific downturn, the investor can lose a large chunk of capital.
The piece uses the Nifty 50 as the benchmark for the SIP and cites several “hot” stocks that have been the talk of the town—Reliance Industries, HDFC Bank, and Infosys, for instance.
2. Methodology: Simulating a ₹3,000 SIP
The author runs a back‑test: a hypothetical investor contributes ₹3,000 each month into a diversified equity‑heavy mutual fund that tracks the Nifty 50 index. The SIP runs over a 15‑year horizon—from 2010 to 2025—to capture a full market cycle, including the 2020 pandemic crash.
The calculation considers:
- NAV (Net Asset Value) changes of the chosen fund.
- Transaction fees (typically 0.1% per transaction).
- Tax treatment (short‑term capital gains tax of 15% on equity funds, but a 50% exemption for a 36‑month lock‑in period).
The final figure shows a cumulative portfolio value of roughly ₹15.8 million (≈ ₹1.58 crore), having invested a total of ₹6,600,000 (₹3,000 × 12 × 15) over the period.
For comparison, the article examines a one‑time purchase of four “hot” stocks on a single day—each chosen from the same 2010 cohort of high‑performers. It lists the following buy‑prices (in ₹ per share) and closing prices in 2025:
| Stock | Buy Price (₹) | 2025 Close (₹) | Gain % |
|---|---|---|---|
| Reliance | 1,200 | 3,700 | +208% |
| HDFC Bank | 600 | 3,200 | +467% |
| Infosys | 700 | 2,300 | +233% |
| TCS | 650 | 3,400 | +427% |
Even though each of these stocks delivers spectacular upside, the overall portfolio value from the one‑time purchase (assuming a 1:1 allocation) is about ₹3.6 million, far below the ₹15.8 million from the SIP.
The article attributes the discrepancy to concentration risk—the four stocks may outperform, but if one underperforms, the whole portfolio suffers. In contrast, the SIP spreads risk across 50 companies, offering better resilience against individual company shocks.
3. Risk‑Adjusted Return Analysis
To deepen the analysis, the piece computes the Sharpe Ratio for both strategies. Using the Nifty 50’s average annual return (≈ 13%) and a standard deviation of 18%, the SIP’s Sharpe Ratio is 0.46. The “hot‑stock” basket, despite a higher nominal return (≈ 31% over 15 years), has a Sharpe Ratio of only 0.32 because of its high volatility and the outsized impact of a single stock’s downturn.
The article points readers to a Bloomberg article on “Risk‑Adjusted Returns” that explains how Sharpe Ratios can help investors compare strategies beyond headline growth rates.
4. Behavioural Factors & Psychological Edge
One of the more insightful segments of the article touches on behavioral finance. The author cites a Harvard Business Review piece on “Why Disciplined Investors Succeed,” noting that:
- SIPs create a habit of investing regardless of market mood.
- They reduce the temptation for herd behaviour and panicking during dips.
- The long‑term view mitigates the influence of short‑term noise.
In contrast, chasing “hot” stocks often triggers confirmation bias and overconfidence. Investors may over‑expose themselves to a single narrative, leading to larger losses if the story fizzles.
5. Practical Takeaways for the Average Investor
The article concludes with actionable advice:
| Point | Why It Matters |
|---|---|
| Start Small | ₹3,000 monthly is accessible to many salaried professionals. |
| Rebalance Annually | Switch to a more equity‑heavy fund during bull markets and add debt when volatility rises. |
| Stay Consistent | Even a 5‑year SIP can beat a one‑off buy of high‑flying stocks. |
| Tax Planning | Lock in the 36‑month exemption to reduce capital gains tax. |
| Avoid “Hot‑Stock” Fever | Stick to a diversified index track unless you have deep expertise. |
The article also recommends a SIP calculator from Moneycontrol, linked in the text, which allows readers to see their own growth potential.
6. Broader Context & Supporting Resources
Throughout the piece, Business Today strategically places hyperlinks to:
- SIP Basics – a comprehensive guide on what SIPs are, how they work, and why they’re popular.
- Nifty 50 Index – detailed performance charts to help readers visualize the market’s long‑term trend.
- Taxation on Mutual Funds – an up‑to‑date explanation of short‑term vs. long‑term capital gains tax.
- Behavioral Finance Research – academic articles that explain why discipline beats hype.
- SIP Calculator – an interactive tool for personal financial planning.
These links enrich the article by offering deeper dives into each concept, thereby empowering readers to apply the insights to their own portfolios.
7. Bottom Line
While the allure of multibaggers and high‑flying stocks is undeniable, the Business Today article demonstrates, with data, that a simple ₹3,000‑per‑month SIP—especially when invested in a diversified equity fund—can produce far superior returns over the long haul. By harnessing rupee‑cost averaging, diversification, and behavioral discipline, investors can outpace the market without chasing every headline stock. For the majority of ordinary savers, the humble SIP remains the most reliable and effective path to wealth creation.
Read the Full Business Today Article at:
[ https://www.businesstoday.in/mutual-funds/story/sip-vs-hot-stocks-how-a-simple-rs-3000-plan-outperforms-high-flying-market-favourites-multibaggers-503706-2025-11-25 ]
