SIP in a single stock?

Like SIP in a mutual fund , can one do a systematic investment in a single stock??...
It means allocating a month every month to purchase a particular stock. Say, on 1st on every month I would buy 2 shares of company X and accumulate it over a period of time. This is definitely a great idea. But SIP works better in case of a portfolio( read as collection of stocks or equity MF). This is because when you invest in a single stock, your risk return proportion is very high. But if you are thoroughly convinced about the growth prospects of a stock you can go ahead understanding the risk involved.
To understand this in a better perspective, someone who was buying Reliance stock every compared with someone who had been accumulating Infosys. Both of been accumulating blue chips , but you know the current scenario is not favouring IT stocks. Things may take a turn tomorrow. So, this kinds of risks / returns and your goals need to be understood before you start an SIP in a single stock.

2 comments:

Sandeep said...

I completely agree with you on this!. Specially when I myself tried this SIP with single stock approach on experimental basis :(

Could you let us know some more about INDEX Funds & how to understand more about Index Funds.

keep writing !

Ideasmoney said...

Sandeep,

Thanks for sharing your thought. We would soon publish on Index funds.

ideasmoney

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