InvestmentFinancial Glossary
Rupee Cost Averaging
Definition
An investment strategy where you invest a fixed rupee amount at regular intervals regardless of market price. When prices are low, you automatically buy more units; when prices are high, you buy fewer units. Over time, this results in a lower average cost per unit than the average market price during the same period.
Why It Matters
Rupee cost averaging is the mathematical engine behind SIP investing. It eliminates the need to time the market and converts market volatility from an enemy into an ally. Historical back-testing on the Nifty 50 shows that SIP investors have almost always earned positive returns over any 7-year rolling period, regardless of when they started.