'SIP is not an investment asset': CA explains why most people are doing it wrong

For millions of Indians, starting a SIP feels like the first major step toward financial security. Every month, money automatically leaves bank accounts and flows into mutual funds, creating the comforting belief that wealth creation is now on autopilot. But according to CA Nitin Kaushik, this growing confidence is also creating a dangerous misconception. In a detailed post on X, the finance expert explained why SIPs alone cannot guarantee long-term wealth and why many investors may unknowingly be making costly mistakes despite investing regularly.

CA Nitin Kaushik began his thread by addressing what he believes is the biggest misunderstanding around SIPs. He wrote that “everyone tells you to start a SIP,” but very few explain how to actually make it work effectively over the long term.

According to him, a SIP is “not an investment asset” in itself. Instead, it is simply a disciplined system that automates investing and builds a savings habit. While automation helps investors stay consistent, Kaushik stressed that consistency alone does not guarantee financial success.


He pointed out that India’s SIP culture has exploded in recent years and how investing has become part of retail investing habits. “The habit is officially built,” he wrote, adding that investors now need to shift focus toward strategy rather than simply continuing monthly deductions without reviewing their plans.

Biggest mistakes people make

The CA said one of the biggest mistakes people make is adopting a “set it and forget it mindset.” According to Kaushik, many investors choose mutual funds based only on recent returns, five-star ratings, or trending performance charts. After that, they rarely revisit their portfolio or evaluate whether the chosen funds still align with their financial goals.


He explained that market cycles constantly change, and funds that perform strongly in one phase may struggle in another. As a result, investors often panic during market corrections and stop their SIPs midway, especially when they see temporary underperformance.

Importance of automation

Kaushik warned that automation cannot replace planning. “A SIP automates the buying process, but it cannot automate your plan,” he wrote. To explain the problem further, he shared an example of someone investing Rs 10,000 monthly across three aggressive mutual funds simply because they appeared attractive at the time. According to him, such an approach may create the illusion of diversification while actually exposing the investor to concentrated risk.

“When the market cycle turns, that portfolio can hit a rough patch,” he cautioned. Instead of blindly continuing investments year after year, Kaushik advised investors to review their mutual funds annually. He described this yearly evaluation as essential maintenance for long-term wealth creation.

Compounding and returns

He also explained how even a seemingly small improvement in returns can create a major difference over time due to compounding. According to Kaushik, earning just 1 per cent higher annual returns on a Rs 10,000 monthly SIP over 20 years could add roughly Rs 14 lakh more to the final corpus. That extra return, he said, often comes from making smarter allocation decisions, rebalancing portfolios, and ensuring investments continue matching long-term goals.


Using a simple analogy, Kaushik compared SIPs to owning a car. Automation keeps the process moving smoothly, but regular servicing is still necessary to ensure performance remains strong over time. “A quick check-up ensures your money is always working at its hardest,” he explained.

Kaushik concluded his post by encouraging investors to stop treating SIPs as a one-time financial solution. Instead, he advised people to align investments with actual life goals, monitor performance regularly, and allow compounding to work over the long term with the support of smart decision-making.