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Why You Should Not Invest in SIPs (Unless You’re Ready to Commit)

Yes, you heard me right. You should not invest in SIPs, but not for the reasons you might think. It’s not because the funds haven't delivered returns in the past or won't deliver returns in the future. The real reason is simple: most people don’t stay invested long enough to benefit from them.

In this blog, we’re not going to talk about how specific funds have performed or what kind of wealth they’ve created. Instead, we’re going to look at a much bigger problem: how many investors have actually stayed long enough to reap the rewards of these investments?

While we are busy blaming fund managers, politicians, the media, or global events, how often do we reflect on our own behavior as investors? The truth is, we often blame others for our mistakes, and it’s time to own up. The data speaks volumes about how we handle our investments—and it’s not pretty.

The Numbers Don’t Lie: Our Short-Term Thinking Is Costing Us

• 45% of SIP accounts and 22% of AUM (Assets Under Management) last for less than 1 year.
• 88% of SIP accounts and 70% of AUM don’t even make it past 5 years.
• Only 11.8% of SIP accounts, representing 29.4% of the AUM, stay invested for 5+ years.

This tells a clear story: most investors are not in it for the long haul. Although we don’t have data for SIPs lasting 7 or 10 years, it’s not hard to predict that the numbers would be even worse. Do you see where the problem lies?

The Real Problem: Investor Behavior

Let’s be real—the best investors don’t win because they know more than others. They win because they have better control over their emotions. Investing is a mental game first and a financial game second.

 

As the market starts to fall, fear takes over. Consider this: the SIP stoppage ratio (the ratio of new SIPs registered vs SIPs discontinued) climbed from 52% in April 2024 to a staggering 109% in January 2025. This means more people are stopping their SIPs than starting new ones. What’s the reason? Fear of losing capital is the psychological culprit, though investors may give various other excuses.

Most investors come to the equity market with the intent of long-term investing, but they bring along a short-term mindset. When faced with a market downturn, many lack the patience to stick it out for 10+ years, even though they happily invest in PPFs, EPFs, FDs, insurance policies, real estate, or gold for 15 to 20 years or more. So why not equities?

The Key to Successful Investing

Let me tell you a secret of successful investing in stock market:
- 1% finding good investments,
- 9% having the courage to buy them, and
- 90% not selling during a bear market when your emotions are screaming at you.

The data clearly shows that most investors are losing out, not because of bad fund choices but because they lack the patience to stay invested when things get rough. If you want to Win the Game, it’s simple—you have to Stay in the Game..

The Final Lesson: Behavior Is the Key to Wealth Creation

The biggest differentiator between those who build wealth and those who don’t isn’t market knowledge, fund performance, or economic timing—it’s behavior. 

Before you start your next SIP, ask yourself this: Am I truly in this for the long term?

If the answer is no, then maybe SIPs aren’t the right investment for you. But if you’re ready to commit, understand that it’s not the market or the funds that will determine your success—it’s your ability to ride through the emotional ups and downs.

So, should you invest in SIPs? Only if you’re ready to stay the course.

Vladimir Lenin’s quote—"There are decades where nothing happens and there are weeks where decades happen"—is apt for the current market environment.