3 weeks ago
Stopping SIPs early hurts returns; staying invested long-term matters
A SIP is like putting a little money aside every month to buy small parts of big companies.
When prices go down, your money buys more shares, and when prices go up, it buys fewer.
This trick, called rupee cost averaging, lowers the average price you pay over time.
If you stop early, you miss out on buying cheap shares when the market is low.
Data from India's Nifty50 shows that people who stayed invested for at least seven years never lost money.
Whether you started at the market's highest or lowest point made almost no difference after ten years.
Pausing for just six months can delay reaching your savings goal by nearly five months.
Adding a bit more to your SIP every year can help you reach a big goal much faster.
So staying invested and slowly increasing your amount works better than stopping when the market dips.
Systematic Investment Plans (SIPs) invest a fixed amount periodically in mutual funds, with equity SIPs recommended for long-term investing.
A Mint analysis of 10-year Nifty50 SIPs found broadly similar returns (12.59%-12.9%) regardless of whether entry was at the year's high, low, or first trading day.
No investor who stayed invested in a Nifty50 TRI SIP for a minimum of 7 years got a negative return, based on data from 1 April 2005 to 3 August 2026.
A six-month pause in a ₹20,000 monthly SIP after two years delays reaching the ₹1 crore goal by 4 months and 27 days.
Annual SIP top-ups speed up goals: a 5% annual top-up reaches ₹1 crore in 15 years and a 10% top-up in 13 years, versus 17 years without topping up.
- Who
- Indian equity mutual fund investors, especially young investors considering stopping or pausing their SIPs
- What
- An analysis of how stopping SIPs early versus staying invested affects returns and the time needed to reach investment goals
- Where
- India, based on Nifty50 index performance
- When
- Data covering a rolling period from 1 April 2005 to 3 August 2026
- Why
- Because data shows the probability of losses falls sharply with longer holding periods, making long-term investing the recommended approach
Key facts
- Instrument
- Systematic Investment Plan (SIP) in mutual funds
- 10-year Nifty50 TRI SIP returns by entry point
- 12.59% (year's highest level), 12.8% (year's lowest level), 12.9% (first trading day)
- Worst 2-year rolling SIP return
- -39.8%
- Worst 5-year rolling SIP return
- -4.4%
- Minimum 7-year SIP return
- 0.4% (no negative returns at 7+ years)
- Average 10-year Nifty50 TRI SIP return
- 12.55%
- Impact of 6-month pause after 2 years
- Delays ₹1 crore goal by 4 months and 27 days
- Annual top-up impact on ₹1 crore goal
- No top-up: 17 years; 5% top-up: 15 years; 10% top-up: 13 years
Quotes
Ravi Kumar TV
Co‑founder of Gaining Ground Investment Services
“Young investors are often looking at the last one year's returns of a fund on an app and expecting the same returns to continue. They are not linking their investments to long-term goals, which is why the investments lack purpose and when short-term returns turn weak, they are quick to stop or switch.”
livemint.com
“Younger investors who are just starting out should top up their SIP every time they get an increment. It does not have to be the full increment.”
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