Why You Should Continue Your SIPs Even During Market Corrections

Mon, 5 May 2025

3 mins

Mutual Funds

We understand that these are challenging times. The overall market sentiment is quite negative - whether it's the Russia-Ukraine conflict up north or tensions on our own borders with Pakistan.

Naturally, when markets get shaky, the first instinct for many investors is to hit pause on their SIPs (Systematic Investment Plans). It feels safer. After all, why invest when the market is falling, right? But should you really stop your SIPs to save for emergencies, or is this actually the best time to stay invested?

Here's the thing: stopping your SIPs during tough times can cost you a lot more than you think. Let’s dive in - and break it down with real numbers.

• What Happens When You Stay Invested in SIPs

  Imagine you had started a SIP of ₹10,000 per month in a Nifty Index Fund 15 years ago.
  
  Over these 15 years, you would have invested ₹16.8 lakhs.
  
  Your portfolio value today? Around ₹48 lakhs, thanks to the power of compounding and the long-term growth of the market.
  
  That's an XIRR (Extended Internal Rate of Return) of 13.8% - a solid performance by any measure.

• What Happens If You Stop SIPs During Market Corrections

  Now, let’s say you panicked every time the market fell by 3% or more  and you stopped your SIPs temporarily.
  
  Over the same 15 years, your total investment would have been only ₹13.7 lakhs. Your portfolio would have grown to around ₹38.3 lakhs.
  
  Sounds fine? Not really. You would have lost out on almost ₹10 lakh! That’s ₹10 lakh less wealth, simply because you tried to time the market instead of trusting your investment plan.

   

  Please note: The above example is for illustration purpose only, past performance does not guarantee future returns.

• Why Should You Never Pause SIPs When Markets Fall?

  Volatility is temporary. Growth is permanent.

  • Market corrections are short-term. But India’s growth story and by extension, the market's long-term trend is upwards.

   

  Rupee cost averaging works best during falls

  • When markets fall, you get more units for the same investment amount. This lowers your average cost over time and improves long-term returns.

   

  The biggest market upswings come right after big falls.

  • If you stop your SIPs, you miss participating when the recovery happens - and historically, recoveries are sharp and rewarding.

   

  Discipline matters more than timing.

  • It's almost impossible to perfectly predict market tops and bottoms. But staying disciplined with your SIPs ensures you ride through all phases and create wealth over time.

• To Bring it to a close:

  In investing, it's not about timing the market. It's about time in the market. The difference between ₹48 lakhs and ₹38 lakhs in our example wasn't skill.
  
  It was simply the discipline to stay invested. So, no matter how "troubling" the times seem - keep your SIPs running. Your future self will thank you.
  
  If you need any further assistance you may reach out to us at  8047593769  or open your account, and we can help you start your investment journey.