SIP Flows Are Slowing. Retail Investors Are Trying to Time the Market. That’s the Problem.

Not long ago, SIPs were the default choice for retail investors. They were simple, consistent, and quietly powerful. You invested every month, the market did its ups and downs, and rupee cost averaging did the heavy lifting.

But that behaviour is changing. And not in a good way.

Retail investors are increasingly trying to “time” the market, shifting from SIPs to lumpsum bets, and stopping SIPs at a much higher rate than before. It looks smart in the moment. Over the long run, it usually hurts outcomes.

What’s Changing in SIP Behaviour

One clear signal is coming from SIP folio trends. The share of incremental SIP folios as a percentage of overall incremental folios has been falling in recent months.

In simple terms, fewer new folios are SIP-led and more investors are opting for lumpsum investing, hoping to catch market dips and avoid market highs.

• October 2025: Incremental SIP folios were 60% of overall incremental folios
• November 2025: This fell to 54%

This could be a one-off. But the data suggests a broader stagnation. More retail investors want the thrill of timing, even if the probability of doing it right is low.

The Red Flag Metric: SIP Stoppage Ratio

The more worrying signal is the SIP stoppage ratio.

SIP stoppage ratio is the ratio of total SIPs stopped in a month to the fresh SIPs started in that month.

Historically, this number stayed in a manageable range:

• Normal months: 45%–50%
• Pandemic period: crossed 60%

But something changed after the clean-up of inactive SIP folios, completed in April 2025.

Since May 2025, the SIP stoppage ratio has been consistently above 75%, and has averaged above 75% for the last 7 months.

That means the new “normal” is now worse than the pandemic peak. And that is not a great signal for long-term retail wealth creation.

Why Investors Are Moving Away From SIPs

The reason is not complicated. For many investors, SIPs feel boring.

You invest the same amount whether the market is up or down. There is no “move” to make. No thrill. No feeling of control.

So some investors try to improve the SIP model by doing this:

• Buy more units when markets are down
• Buy fewer units when markets are up

The logic sounds appealing. Indian markets have been in a longer-term bull run, so if you can time tops and bottoms even with “some” precision, you could earn better returns than a plain SIP.

The problem is that this works only in theory. In real life, most people don’t time consistently. They hesitate at bottoms and get confident at peaks. That’s human behaviour.

Why Timing the Market Usually Fails

Trying to time the market is like trying to catch every good moment in a long movie. You may succeed sometimes. But you don’t control the plot.

1) Timing makes little difference over long horizons unless you do it perfectly

Market timing only improves results if you can repeatedly buy near bottoms and avoid near tops. That requires skill, speed, and discipline. Most retail investors don’t have all three consistently.

2) Missing a few key crests and troughs can hurt outcomes sharply

Equity returns are not evenly spread across days or months. A small number of sharp up-moves contribute a large part of long-term returns. If you pause your SIP during volatility, you often miss those recovery bursts.

3) SIPs exist to protect goals, not to entertain investors

SIPs are designed for long-term goals. They reduce the need to make repeated decisions and they build discipline. When you start “tweaking” SIPs based on mood and headlines, you may derail the goal itself.

Here’s a simple real-world pattern:

• Markets fall and investors pause SIPs “to wait for clarity”
• Markets recover quickly and investors restart late
• Result: fewer units bought at lower prices and weaker long-term compounding

The irony is simple: the months you feel most unsure are often the months where SIP discipline helps the most.

What Investors Should Do Instead

If you want your long-term wealth to grow, the focus should be on persistence, not timing.

• Continue your SIP through volatility
• Increase SIP amounts when income rises
• Review the portfolio once or twice a year, not daily
• Keep investing linked to goals, not market mood
• Get professional guidance if your fund mix and risk level are mismatched

Markets will do what they do. Your job is to stay consistent. Timing is a waste of time. Persistence is the edge.

Key Takeaways

• Incremental SIP folios fell from 60% (Oct 2025) to 54% (Nov 2025), showing rising interest in lumpsum timing.
• SIP stoppage ratio has stayed above 75% since May 2025, worse than pandemic peaks.
• Many investors find SIPs “boring” and try to tweak investing based on market levels.
• Market timing works only if done consistently and accurately, which most retail investors struggle to do.
• SIPs are built for goal-based discipline, and tampering with them can weaken long-term outcomes.

FAQs

1. What is SIP stoppage ratio?

SIP stoppage ratio is the number of SIPs stopped in a month compared to the number of new SIPs started in the same month.

2. Is it better to pause SIP in volatile markets?

Pausing SIPs during volatility can lead to missed recovery phases and fewer units accumulated at lower prices, which can weaken long-term outcomes.

3. Can timing the market beat SIP returns in the long run?

It can, but only if timing is done consistently and correctly. For most retail investors, the odds of repeating this over years are low.

4. What should investors do when markets fall?

For long-term goals, staying consistent with SIPs and reviewing the portfolio periodically is usually more effective than reacting to short-term market moves.

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice.