The short answer
In most cases, yes, keep it going. A falling market is when your SIP does its most useful work, because the same monthly amount buys more units at lower prices. Stopping during a fall usually means buying less when things are cheap and more when they’re expensive again.
The exceptions are real, though, and we cover them below.
Why a fall helps an SIP
Your SIP invests a fixed amount every month. When prices drop, that amount buys more units. When prices recover, all those extra units rise in value too.
Here’s a simple example. Say you invest ₹10,000 a month in a fund whose price, or NAV, falls 30% over six months and then recovers to where it started by the end of the year.
| Month | Fund price (NAV) | Units your ₹10,000 buys |
|---|---|---|
| Month 1 | ₹100 | 100 |
| Month 3 | ₹88 | 114 |
| Month 6 (the low point) | ₹70 | 143 |
| Month 9 | ₹84 | 119 |
| Month 12 | ₹100 | 100 |
Selected months shown. Illustration only; real markets rarely move this neatly.
If you kept your SIP going all year, you invested ₹1.2 lakh and bought about 1,419 units at an average price of ₹84.60. When the price recovered to ₹100, your investment was worth about ₹1.42 lakh, a gain of roughly ₹22,000. That’s an 18% gain, even though the fund itself only got back to where it started.
If you stopped after three months because the fall worried you, your gain was about ₹2,000. You avoided the months when prices were lowest, which were exactly the months that would have made you money.
What the longer history says
Real falls are messier than this example. Some recover in months, as in 2020. Others take a few years, as after 2008. So we looked at what happened over longer periods.
In our study of Sensex data from 2001 to 2021, we imagined an SIP starting in every month and continuing for 100 months, about eight years. Not one of those 146 SIPs ended with a negative return — including the ones that ran straight through the 2008 crash. You can see the full study on The Hundred page.
That’s past data, and it doesn’t promise the future. But it shows why time in the market, not timing the market, is what usually does the work.
What we’d usually suggest
- Keep the SIP running if the money is for a goal that’s five years or more away.
- Don’t check your portfolio every day during a fall. It makes staying calm much harder, and nothing useful comes from it.
- If you have spare cash and a long horizon, a fall can be a good time to invest a little extra. Only do this with money you won’t need soon.
- Look at the goal, not the balance. A portfolio that’s down 20% this year is still on track if the goal is ten years away and the plan hasn’t changed.
When it’s different
- You need the money soon. If the goal is within one to three years, that money shouldn’t be in equity funds at all. The fix isn’t to stop the SIP but to move money meant for near-term goals into safer, debt-based funds, ideally before a fall rather than during one.
- Your income is at risk. If you’ve lost your job or your business is under strain, protecting your cash comes first. Many fund houses let you pause an SIP for a few months rather than cancel it. Pausing is far better than redeeming your investments at low prices.
- The problem is the fund, not the market. If your fund has done noticeably worse than similar funds for two or three years, that’s a reason to review the fund, whatever the market is doing. A market fall affects nearly every fund; it isn’t, by itself, a reason to switch.
CurateMyMoney is an AMFI-registered mutual fund distributor (ARN-184811). Mutual fund investments are subject to market risks. Read all scheme-related documents carefully. Tax rules mentioned are as applicable at the time of writing and may change; please check the current rules or consult a tax professional before acting.
