Your fund statement shows a red number for the third month running and a colleague says he has paused all his SIPs "till things settle". It feels like the sensible thing to do. For most people with a goal five or more years away, it is the opposite.
What a fall does to your SIP
A SIP buys units of a fund every month at that day's NAV, the price of one unit. When the market falls, the NAV falls, so the same ₹10,000 buys more units. Those cheaper units are what lift your returns later, once prices recover.
The red number on your statement is the value of units you already hold, measured at today's price. You have not lost that money unless you sell. Stopping the SIP does nothing to protect those units. It only means you stop buying new ones while they are on sale.
A worked example: two investors, one bad year
Asha and Ravi both start a ₹10,000 monthly SIP in the same equity fund. To keep the table short we group months into quarters, so each row is ₹30,000. The fund's NAV drops 30% over the first year and then climbs back. After two quarters, Ravi gets nervous, stops his SIP and keeps the money in his savings account. He restarts once the NAV is back above 90.
| Quarter | NAV (₹) | Asha's units | Ravi's units |
|---|---|---|---|
| 1 | 100 | 300.0 | 300.0 |
| 2 | 88 | 340.9 | 340.9 |
| 3 | 76 | 394.7 | stopped |
| 4 | 70 | 428.6 | stopped |
| 5 | 74 | 405.4 | stopped |
| 6 | 82 | 365.9 | stopped |
| 7 | 92 | 326.1 | 326.1 |
| 8 | 100 | 300.0 | 300.0 |
| Total units | 2,861.6 | 1,267.0 |
At the end of two years the NAV is ₹104. Here is where each of them stands:
The market is back where it started, plus 4%. Both put away the same ₹2,40,000. Asha ends up roughly ₹45,000 ahead, and the only difference is that she kept buying during the four quarters Ravi sat out. Ravi's units are the expensive ones from the start and the end of the cycle.
The NAV path above is invented to show how unit buying works. It is not a forecast and not the record of any real fund. Real recoveries can take longer than a year, and sometimes much longer. Mutual fund investments are subject to market risks, read all scheme related documents carefully.
Why stopping feels right
Losses hurt roughly twice as much as gains of the same size feel good. When the statement turns red, the brain looks for an action, and stopping the SIP is the easiest one available. It feels like closing a tap.
The trouble is timing. To come out ahead after stopping, you need to restart at a lower price than where you stopped. Almost nobody manages this, because the market usually turns while the news is still bad. By the time it feels safe to restart, prices have often moved well above the point you left. That gap is what cost Ravi in the example.
There is a quieter cost too. An SIP that is stopped "for a few months" often stays stopped for a year or more. The habit breaks, and the money finds other uses. Our cost of delay calculator shows how much a one-year gap can take out of a 15-year goal.
When stopping or pausing does make sense
Keeping the SIP going is the right default, not a rule for every case. A pause or a change is reasonable when:
- Your income has stopped or dropped sharply. If you have no emergency fund, pause the SIP rather than borrow on a card to keep it alive. Most fund houses let you pause an SIP for a few months without cancelling it.
- The goal is now less than three years away. Money for a school admission or a house down payment next year should be moving out of equity anyway, fall or no fall.
- The fund does not match the goal. A small cap fund for a two-year goal was the wrong choice before the fall. Fix the fund, not the timing.
- The fund has lagged its own category for three years or more. That is a reason to switch to a better fund in the same category, not a reason to leave equity.
Notice that none of these reasons is "the market is down". They are about your cash flow, your timeline and the fund itself.
What to do instead of stopping
- Check your emergency fund. Three to six months of essential spending in a savings account, short deposit or liquid fund. If that is in place, a market fall cannot force you to sell.
- Look at the goal date, not the daily NAV. If the goal is ten years out, this year's fall is one bad stretch in a long run.
- Look at your asset mix once a year. If equity has fallen from 60% to 50% of your portfolio, a yearly rebalance moves some debt money back into equity. See how to split money between equity and debt.
- If you have spare cash, step up. A one-time top-up or a higher SIP during a fall buys more units at lower prices. Only do this with money you will not need for at least five years.
- Open the app less often. Checking once a month is plenty. Daily checking during a fall leads to bad decisions, not better ones.
Questions we hear during every fall
Should I redeem now and reinvest when the market is lower?
That needs two correct calls: when to sell and when to buy back. Getting both right is rare, and selling equity units held under a year may also attract short-term capital gains tax. Rules as of 2026, check current rules.
My SIP has been negative for a year. Is the fund bad?
Not necessarily. Compare it with other funds in the same category over three to five years, not with a bank deposit over one year. If the whole category is down, the fall is the market, not the fund.
Is it better to pause or to cancel?
If you need a break because of cash flow, pause. A paused SIP restarts on its own on a fixed date, so the habit does not get lost.
Thinking of stopping your SIP?
Send us your SIP amount and goal year before you press stop. We look at your funds, your emergency cover and your timeline, and reply on WhatsApp with whether to continue, pause or switch. No fee for this.
Keep reading
- What is a SIP and how does it work?
- SIP, step-up SIP and lumpsum explained
- Mutual fund myths we hear every week
- Get your portfolio reviewed
General information, not a recommendation of any scheme or product. Figures are examples using an assumed price path for illustration, not a promise of returns. Tax rules as of 2026, check current rules. Mutual fund investments are subject to market risks, read all scheme related documents carefully. Past performance may or may not be sustained in future.
