It’s easy to stay calm and confident when markets are rising and your portfolio is showing green numbers. But the moment markets dip, fear creeps in, and many investors hit the panic button by stopping their SIPs. Sounds familiar?
If you’re not sure about how to manage SIPs during volatile markets, getting assistance from the best mutual fund agents in Pune, such as Golden Mean Finserv, can help you make informed and confident decisions customized to your financial goals.
Understanding Why Investors Stop SIPs
According to recent industry data, the SIP stoppage ratio which compares the number of SIPs stopped versus those newly started, has been rising steadily. In January 2025, the stoppage ratio crossed 100%, meaning more SIPs were discontinued than newly registered.
The reason? Fear. When markets fall, many investors assume their investments are “losing money” and stop contributions to prevent further losses. But this short-term reaction can actually hurt your long-term goals. The best mutual fund investment in Pune would be the one which doesn’t stop SIPs during market dips.
Let’s dig deeper into why investors act this way.
The Psychology Behind Investment Decisions
Investing is not just about money, it’s about mindset. Emotions like fear and greed often drive financial behavior more than logic or data.
When markets are high, investors rush to invest more, expecting quick profits. When markets fall, panic sets in, and people withdraw investments or stop SIPs. This pattern is known as “behavioral bias”, and it’s one of the main reasons why investors miss out on the power of compounding.
Remember, markets move in cycles. Every fall is followed by a recovery, and those who stay invested benefit the most.
What Happens When You Stop SIPs During a Market Fall?
It’s natural to feel anxious when your SIP returns start dipping, but let’s see what really happens if you pause or stop your investments.
You Miss the Opportunity to Buy Low When markets crash, the NAV (Net Asset Value) of mutual funds drops. Continuing SIPs during this phase allows you to buy more units at a lower price, this is called rupee cost averaging. Stopping SIPs means missing this golden opportunity.
You Break the Power of Compounding SIPs work best over long durations. Every contribution builds upon previous ones, creating a compounding effect. When you pause, you interrupt this growth cycle and reduce your potential wealth creation.
You Lose Financial Discipline SIPs encourage consistency. Once you stop, it becomes harder to restart. Missing even a few months can create gaps in your investment journey and delay your goals.
You Reduce Long-Term Returns Historically, markets recover stronger after corrections. By staying invested, your units bought at lower NAVs grow more when markets rise again.
In short, volatility is temporary, your goals are not.
What Should You Do Instead of Stopping Your SIP?
Here are a few smart strategies to follow during market corrections:
1. Stay Focused on Your Goals
Your SIPs are designed for long-term goals like retirement, buying a home, or children’s education. These goals remain the same even when markets fluctuate. So, stick to the plan.
2. Continue or Increase SIPs
If you have the financial capacity, consider increasing your SIP amount during market dips. It’s like buying good quality assets at a discount.
3. Avoid Checking Portfolio Too Often
Constantly tracking your investments during volatility can lead to anxiety. Instead, review your portfolio periodically (say, every 6 or 12 months).
4. Invest Through Financial Expert
A professional expert can help you re-evaluate your asset allocation, rebalance your portfolio if needed, and help you stay on the right track.
The Importance of Rupee Cost Averaging
One of the biggest advantages of SIPs is rupee cost averaging, the process of investing a fixed amount regularly, irrespective of market conditions.
When markets fall, your SIP buys more units; when they rise, it buys fewer. Over time, this balances out the cost and helps you achieve a better average purchase price.
It eliminates the need to “time the market” and make sure you stay invested through all phases, which is the real secret to long-term corpus creation.
The Power of Staying Invested
Data from past decades show that investors who stayed invested during downturns ended up with significantly higher returns than those who paused their investments.
For example, if you had continued your SIP through previous market falls, the recovery phase that followed would have not only recovered your temporary losses but also multiplied your units.
When Should You Actually Review Your SIPs?
There are times when reviewing your SIPs makes sense, but not because of short-term volatility. You should reconsider your SIPs only when:
Your financial goals change (for example, early retirement or new responsibilities).
There is a change in fund performance over a long period (consistently underperforming funds).
Your risk appetite has evolved.
Conclusion:
The market will always have its highs and lows, that’s the nature of investing. But SIPs are designed to help you navigate exactly that. The key is not to stop but to stay consistent.
By continuing your SIPs, you enjoy rupee cost averaging, compounding, and potential long-term corpus creation. Market volatility is just noise, your focus should be on the melody, your financial goals.
