Should You Stop SIP When the Market Falls?

Added: 2026-05-06

[00:00:02]If you start a 5,000 rupee SIP and do it for 10 years, it becomes 11 lakh rupees.

[00:00:08]If you do it for 20 years, it becomes 45 lakh. Carrying on your 5,000 rupee investment for 30 years becomes 1.5 crore [music] at 12% annual compounded return. Getting scared will prove to be the most [music] expensive mistake investors make. Hello and welcome to Investors' Hangout brought to you by Aditya Birla Sun Life Mutual Fund and Value Research. Now, in March 2026, 53.38 lakh SIPs were stopped or discontinued.

[00:00:35]Only 52.82 lakh new SIPs were started.

[00:00:39]That same month, the investors who stayed put, they contributed a record 32,087 crore rupees.

[00:00:46]Two numbers, two opposite decisions, one of them compounds. So, five questions, 10 minutes, and by the end of this episode, you'll get to know if you should stop your SIP.

[00:00:57]So, Dhirendra, 53 lakh SIPs stopped. The number, it sounds alarming. Is it? Not really. Uh you have to look at your own narration.

[00:01:07]53.4 lakh SIPs stopped and nearly 53 lakh started. So, it's a very natural course. It's a very normal chart. But, it makes a very interesting headline. It makes it a very alarming headline. Uh but, it isn't alarming uh because month after month for 3 years, SIP amount pouring into mutual fund is rising.

[00:01:28]Indian investors have this small investors have the small That's their only hope of converting their small contribution turning it into a meaningful capital and uh riding the equity despite the despite whatever, you know, all the turbulence in the market which they are not used to.

[00:01:46]Uh for the first time after 2 3 years, we have we have witnessed an 11% decline in the month of March. So, it's bound to have it's bound to scare relatively new investors. So, fear kicks in at some point. It was also the month of March. A lot of people want to do their book their losses. There could be all kind of technical adjustment happening.

[00:02:05]That if I'm sitting on gains and I uh some other things where I have losses, I will square up things before March 31st so that my financial year end I can settle those. Get credit for the losses, square up my gains. This is a very normal thing. It is It's hardly There's nothing alarming about it. Okay.

[00:02:22]For those who did stop their SIPs, what does it really mean for their investments? What does it actually cost you?

[00:02:29]For all those investors who are getting scared to stop their scared by the market to stop their SIPs, let me just give you the context and it's rooted in very simple arithmetic, very simple maths.

[00:02:40]Which is if you start a 5,000 rupee SIP, do it for 10 years, it becomes 11 lakh rupees.

[00:02:46]In between if you stop, you will you will not be a rupee millionaire even.

[00:02:49]So, that feeling is good with for a for somebody who is barely able to save 5,000 rupee becoming having 11 lakh rupees after 10 years is good news.

[00:02:58]If you do it for 20 years, it becomes 45 lakh. If you stop anytime in between, we are stopping our journey from 10 lakh to 45 lakh rupees.

[00:03:08]And if you travel for 30 years, the money becomes 1.5 crore.

[00:03:14]Carrying on your 5,000 rupee investment for 30 years becomes 1.5 crore at 12% annual compounded return.

[00:03:22]And this 12% annualized return on the market is about 40% less than what has Sensex given you in the last 30 40 years.

[00:03:34]Make a choice.

[00:03:36]Think wisely.

[00:03:37]Start your SIP and getting scared will prove to be the most expensive mistake investors make.

[00:03:44]Starting your SIP is like planting a tree. You don't see the fruits for a long time.

[00:03:50]And then you start getting it year after year.

[00:03:54]Right. Now, you published some data recently which was very interesting and it shocked a lot of people. Can you play Please share it with us here? Yes, we did a very elaborate exercise for Mutual Fund Insight. It was published a few months back. We looked at 170 diversified equity fund, the kind of fund which we suggest that we investors should generally do their SIP. What happened was we adjusted the return investors' return based on the flows into the fund. When people invest and when people take out or when they stop their SIP or whatever. What we realized was a fund generates say 10% return, then the investors' return based on this methodology turned out to be 1 to 3% less. Investors always make less than what the fund has generated.

[00:04:38]And in the worst case scenario, it was 10% less. Why does it happen?

[00:04:42]Because the investors exit at the wrong time. When it gets high, they start investing. Maybe they start investing more. And [snorts] when it slips, they get scared and they are scared out of it at the wrong time and they stay out.

[00:04:54]That translates into uh this this differential. A fund generates more return than the return that you are able to generate for you know, that you are able to realize or that is yours.

[00:05:06]But, and that is entirely attributed to this uh behavior gap. That is entirely driven by the way you conduct yourself.

[00:05:13]>> [snorts] >> But, telling someone that stay invested during a crash is it's easier said than done. How does one actually stay invested when they see red on their screens?

[00:05:22]I would say that three things, concrete, not motivational. Uh one is that uh just understand what falling market does to your SIP if you're investing for many many years.

[00:05:34]You are buying cheap now.

[00:05:36]You you really have to absorb this that market has gone down and your new investment is happening at a lower price.

[00:05:43]Second is that there are two parts to it. The value that you see of the the accumulation that has happened on account of your SIP going on for a while.

[00:05:53]That is the value which you are unlikely to need because equity investment is for the long run. You are doing it for a couple of years.

[00:05:58]Uh at least for many many years. And if you started recently, this is just the beginning.

[00:06:04]So, the portfolio value will keep changing.

[00:06:07]And you have to automate this process because this is your process.

[00:06:11]5,000 goes in gets invested every month.

[00:06:15]Next year it will be 6,000. Next year it will be 8,000 or whatever. Whatever you are able to plan, save, and invest. That is the process. See the results after 5 7 years. And if you are really getting upset with this, look at your asset allocation.

[00:06:30]You may not be prepared for 100% equity right now.

[00:06:35]Have Have aggressive hybrid fund. That that will not witness the kind of free fall. Have a balanced fund or a balanced advantage fund that will not have the kind of free fall that you have witnessed. And you will be able to derive 70% of the equity advantage there.

[00:06:51]Uh so, three things to do. Okay. Someone is watching this with their uh finger on the stop SIP button. What would you tell them right now?

[00:07:00]Take your finger off. And uh no, but resist the urge to watch it every day uh because it's very noisy. More so when you look at the war and you think of your investment. Uh it doesn't really help. Then if you stopped it, restart.

[00:07:14]You are buying cheap. Third is that, you know, if your goal is 5 7 years away, uh why worry? If you're optimistic about the country, if you're optimistic about the economy, every reason you should be optimistic about the uh about the markets as well and that to a diversified equity fund which is a small subset of relatively better performing companies which is curated, filtered. I'm not saying all funds will And if you really can't If you think that you can't choose a good fund, go for an index fund. But, do whatever long-term money invest in equity.

[00:07:47]Choose a vehicle. Be at it and leave it alone. Resist your urge to fiddle with it. Resist your urge to move into gold at the wrong time. Resist your urge to move into fixed income because you can't take it anymore. Maybe consider changing the asset allocation. Choose a slightly more conservative or a steadier take on growth uh vehicles. That's about it. But, don't abandon it.

[00:08:11]All right. So, don't abandon your SIPs when the market crashes. It is more important to continue at that time because you're purchasing more units at the same price. That's all we have for you in this episode. We'll see you next week.

[00:08:26]>> [music] [music] [music] [music] [music]