SIP vs Buying the dip: 1. Daily prices

Earlier post: SIP vs Buying the dip - Plan

Last week, I posted that I will check if SIP is better or Buy the dip? I have downloaded Nifty50 TRI data from here and considered savings interest as 3.5%. Data on savings interest can be seen here.

These calculations are done till the last trading day that is 23rd October 2020.

SIP: Buy ₹1000 worth of units based on Nifty50 TRI value. At the end of the respective period of calculation, the total units bought are calculated. The current value of those units is calculated and then all data is fed to the XIRR function of Google sheet.

BTFD: If Nifty50 TRI is not down 1%, we will add ₹1000 into a savings account. If Nifty50 TRI is down 1%, we will use 10% from whatever money accumulated in the account. Interest accumulation is done daily at a rate of 0.013% for simple calculation.

After calculations, final returns can be seen in the table below.

As you can see, the effect of buying the dip on returns reduces in the long term. Is it really due to a shorter time frame or the recent dip in March 2020? We need to check it using rolling returns with different time frames. I will post those data some other day.

To-Do List:

• The same analysis on weekly data: SIP vs 5% DIP
• Rolling returns analysis on daily data
• Rolling returns analysis on weekly data

Let me know if you want to test any more scenarios.