Thinking of stopping your SIP? Why market volatility says don’t

₹29,845 crore in February, down 4% from ₹31,002 crore in January, according to data from the Association of Mutual Funds in India (Amfi).As markets fall, many investors are seeing negative returns and wondering whether to stop SIPs. The math suggests they shouldn’t.The core mechanism behind SIPs is rupee cost averaging. When markets fall, a fixed monthly investment buys more units.

A ₹10,000 SIP, for instance, buys 200 units at an assumed net asset value (NAV) of ₹50 in January. At ₹40 in February, it buys 250 units; at ₹35 in March, about 285 units and around 222 units in April at an assumed NAV of ₹45. Over four months, the investor’s average cost falls to ₹41.8 per unit—16% below the starting point.

That lower average cost is the point.Stopping a SIP during a downturn carries a less obvious cost. Markets rarely recover in a straight line; they tend to rebound in a few sharp bursts. Investors who pause and wait for clarity often re-enter after the bounce, at higher NAVs, missing the period when units were cheapest.Those who stayed invested through the March 2020 Covid-19 crash and the 2008 financial crisis accumulated more units at lower average costs than those who stopped.

The longer the SIP horizon, the more downturns it captures, each one an opportunity to accumulate at lower prices and benefit when markets recover.“Rupee cost averaging works well when markets are volatile, sideways or in a bearish phase,” said Amol Joshi, founder of Plan Rupee Investment Services.Behavioural biases compound the challenge. Loss aversion, the tendency to feel losses more sharply than gains, often pushes investors to stop investing at precisely the wrong moment. The automatic nature of SIPs helps sidestep that impulse.For retail