More people are stopping SIPs: Should you also consider exiting?

More investors are pressing pause on their SIPs as markets turn volatile. Seeing losses can make anyone rethink their strategy, but is stopping really the right move, or could it hurt your long-term plans?

In Short

• More SIPs stopped than started after 11 months
• Investors uneasy due to recent market volatility
• Patience key; exiting early can hurt returns

If you’ve opened your investment app lately and felt a bit uneasy, you’re not alone. Seeing your SIP (Systematic Investment Plan) portfolio in the red can make anyone question whether it’s the right time to continue investing. Many investors seem to be acting on that instinct, and the latest numbers clearly show it.

For the first time in 11 months, more SIPs were stopped than started. Around 53.38 lakh SIPs were discontinued or matured last month, while only 52.82 lakh new ones were opened. The numbers reflect a shift in investor behaviour, and a growing discomfort with market volatility.

WHY INVESTORS ARE HITTING PAUSE

Market ups and downs are not new, but recent volatility has made many investors nervous. In fact, returns from one-year and even two-year SIPs have turned negative for several funds, which can feel discouraging.

In a LinkedIn post, certified financial planner and personal finance expert Ritesh Sabharwal explains the sentiment: “It feels wrong to keep investing when your portfolio is red.”

And that’s exactly why many investors are choosing to stop or pause their SIPs. But according to experts, this reaction may be driven more by emotion than logic.

THE LOGIC BEHIND STAYING INVESTED

SIPs are designed to work best when markets are uncertain. The core idea is something called rupee cost averaging.

Sabharwal puts it this way: “When markets fall, your Rs 10,000 SIP buys more units than it did before.”

This means that when prices drop, you accumulate more units for the same amount. And when markets recover—as they have historically—those extra units help boost your returns.

He adds, “Stopping your SIP in a downturn is like leaving halfway through the part where it actually works.”

To put this into perspective, I remember when the West Asia war sent markets into a sudden free fall. A colleague of mine saw his portfolio drop by nearly Rs 10,000 in just a week. It was unsettling, and the first instinct was to stop investing. But he didn’t.

He stayed invested because, as he put it, SIPs are built for phases like this. When markets fell, the same fixed investment started buying more units. It didn’t feel great in the moment—especially with everything in red—but it quietly improved his long-term averages.

WHAT THE NUMBERS REALLY SHOW

To understand this better, think of a simple example. When markets are high, your SIP buys fewer units. When markets fall, the same SIP amount buys more units at a lower price.

As Sabharwal explains, the recovery phase is where these extra units start multiplying in value. This is why continuing during downturns can actually improve long-term returns.

ARE THERE SMARTER WAYS TO INVEST DURING VOLATILITY?

For those still feeling unsure, there are ways to make SIP investing more flexible.

Sabharwal suggests spreading investments through weekly SIPs instead of monthly ones. This allows more entry points into the market, helping average out costs even further.

Another option is using a Systematic Transfer Plan (STP), where you park a lump sum in a safer fund and gradually move it into equities. This helps capture market dips without investing everything at once.

WHY PATIENCE MATTERS IN SIPs

One of the biggest mistakes investors make is exiting too early. SIPs are not designed for short-term gains. They need time to go through a full market cycle.

Sabharwal points out, “SIPs need 12–18 months minimum to absorb a full market cycle.”

Stopping midway, especially during a downturn, often means missing out on the eventual recovery.

A SIGNAL INVESTORS SHOULD NOT IGNORE

The fact that the SIP stoppage ratio has crossed 100% is a strong indicator of how investors are reacting. But it also highlights a common pattern, i.e., pulling out when markets are down.

Sabharwal sums it up clearly: “This is when you stay in. Not when you leave.”

In simple terms, the current trend may reflect fear, but for long-term investors, it could also be a reminder to stay the course.

- Ends