Why You Shouldn’t Stop SIPs During Market Corrections

What Happens When You Stop SIPs During a Market Crash?

When markets turn volatile, many investors panic and pause their SIPs (Systematic Investment Plans). It's understandable - but it’s also one of the worst financial decisions you can make.

Every time there's political uncertainty or market correction, like the one we saw during the COVID-19 crash, investors start worrying: “Should I stop my SIP now and wait for things to settle?”

Short answer? No.
Investors who continued their SIPs during the COVID period didn’t just survive - they thrived. Why? Because SIPs are designed to take advantage of market volatility.

Why SIPs Work Better in Tough Markets

The power of SIPs lies in rupee cost averaging:

• When the market falls - you get more units.
• When the market rises - your value grows faster.

SIPs work best in volatile or declining markets because they let you accumulate units at lower prices. If you’re new to investing, here’s our Beginner’s Guide to Mutual Funds to get started.

Trying to time the market is not only stressful - it rarely works. But investing regularly and staying disciplined almost always does.

Examples: What If You Had Started SIPs at the Worst Time?

Let’s say you had the worst market timing and invested right before major crashes. Here’s how your SIP would have performed anyway:

Even if you started at the peak, your SIP would have delivered double-digit returns - proving that time in the market beats timing the market.

How to Minimize Losses During Bear Markets

Bear markets aren’t new in India. We’ve seen sharp corrections in: 2000 (Dotcom bubble), 2008 (GFC), 2011, 2013, 2018, and 2020 (COVID)

So how should you protect your portfolio?

1. Stay Invested via SIPs

Every market crash offers discounted NAVs - your SIP buys more units. When the recovery comes, your returns compound faster.

2. Stick to Asset Allocation

Here’s a simple 3-step plan:

1. Define your goals - short, medium, and long-term.
2. Allocate debt funds for short-term, equity for long-term goals.
3. Rebalance regularly. When equity outperforms, shift a portion to debt. When markets fall, reallocate into equity.

This way, you book profits at highs and invest at lows - automatically.

3. Consider Tactical Allocation Funds

Funds like: Balanced Advantage Funds (BAFs), Equity Savings Funds, Multi-Asset Allocation Funds

These shift between equity, debt, and derivatives based on market conditions, helping manage risk without needing you to take action.

Bear Markets Build Strong Portfolios

Market corrections are scary but they are also essential for long-term wealth creation. SIPs turn those market dips into opportunities. By stopping your SIP:

• You lose the cost averaging benefit
• You may miss the rebound rally
• You disturb your financial discipline

Takeaway

• Don’t stop SIPs during market corrections.
• Use them to accumulate more at lower prices.
• Follow a sound asset allocation strategy.
• Consider hybrid funds for smoother rides.

Want to Review Your SIP Strategy?

Book a Free Consultation Call to see if your current investment plan matches your goals and risk profile.

You can also use our SIP Calculator - Plan Your Investments to estimate how much you need to invest monthly to reach your goals.

Disclaimer: The information provided in this article is for informational purposes only. It does not constitute financial, legal, or investment advice. Please consult a qualified professional for advice specific to your situation. The views expressed in this article are based on publicly available information and may not reflect the most current market conditions.