Should you stop your SIP because the market is not doing well? History suggests otherwise

Market corrections and periods of weak returns often leave mutual fund investors wondering whether they should continue their systematic investment plans (SIPs) or pause them until market conditions improve. When markets are not doing well, and mutual fund returns remain low or even turn negative, many investors start wondering whether they should stop their SIPs. However, historical data shows that staying invested during such difficult periods has often helped investors benefit when markets recover over the long term.

According to a recent SIP Analysis Report by WhiteOak Capital Mutual Fund, periods of subdued returns in the early years of investing have often been followed by stronger outcomes over longer investment horizons. The report highlights that investors should focus on their long-term financial goals rather than reacting to short-term market movements.

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The report notes that equity as an asset class is inherently volatile, and investors may experience periods of low returns during the initial years of their SIP journey.

However, historical analysis of SIP investments in the BSE Sensex Total Return Index (TRI) between August 1996 and May 2026 suggests that SIPs which delivered relatively lower returns during the first five years often generated better returns over a 10-year period on average. The report describes this phenomenon as "A Slow Start is a Good Start."

According to WhiteOak Capital's analysis, short-term underperformance should not discourage investors from continuing their SIPs, as the benefits of rupee-cost averaging and long-term compounding tend to play out over extended periods.

The report also addresses another common investor dilemma—whether it is better to wait for the "right" time to invest.

According to WhiteOak Capital, consistently timing market movements is nearly impossible. Investors who delay investments while waiting for better entry points risk missing opportunities, and not investing at all can prove more costly than entering the market at an unfavourable time. The report reiterates a well-known investing principle: "It's time in the market, not timing the market."

The study also examined whether factors such as SIP dates or investment frequency significantly influence long-term returns.

Using more than 28 years of Sensex TRI data, WhiteOak Capital found little meaningful difference in returns generated by SIPs made on different dates of the month. As a result, the fund house suggests choosing a SIP date that aligns with the investor's salary credit or cash flow cycle rather than trying to identify the "best" day for investing.

Similarly, the report found that daily, weekly and monthly SIP frequencies generated almost identical long-term returns. The key takeaway, according to the study, is that starting early and investing consistently matters far more than the frequency selected.

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The report concludes that successful SIP investing is driven primarily by four factors: starting early, investing regularly, staying invested for the long term and remaining focused on financial goals. It argues that investors should spend less time worrying about market cycles, SIP dates or frequencies and more time maintaining investment discipline.

For investors worried about weak market performance, the message from historical data is clear: short-term disappointments do not necessarily translate into poor long-term outcomes. In many cases, the SIPs that appeared disappointing in the early years ultimately delivered stronger returns over a decade, rewarding investors who stayed the course.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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