Imagine this: You have started a monthly SIP of ₹5,000 in an equity mutual fund, earning an annual return of around 10%. After 5 years, your investment grows to ₹3.90 lakh. Elated by the gains, you switch funds, believing you have secured a great return.
But what if you stretched that investment over 10 years? It would grow to ₹10.33 lakh. If you continued your SIP for 20 years, it would reach approximately ₹38.28 lakh. And after 30 years? You would see a solid ₹1.14 crore.
This isn’t magic; it’s the quiet power of compounding at work, if you allow it to run uninterrupted. Here’s a critical insight that many investors overlook: compounding cannot deliver its full potential if you frequently pause, stop, or chase after the “next big thing” by switching funds.
Recent AMFI data from June to November 2025 shows that new SIP registrations are impressive, often ranging from ₹55 to ₹68 lakh per month. However, the stoppage hovered around ₹41 to ₹48 lakh, pushing the stoppage ratio consistently above 70% (sometimes even reaching 77%). This means that for every 100 new SIPs, over 70 are disappearing, not necessarily because investors are abandoning their financial journeys, but often due to scheme switching, pausing during market dips, or impulsively redirecting funds.
The real takeaway? Consistency is the secret ingredient to success, and frequent churning dilutes its effectiveness. The SIP stoppage ratio is not merely a statistic; it’s a reflection of investor behavior, showing that while our intention to invest is high, our patience is often low.
In this blog, we will explore what drives individuals to stop their SIPs, how to resist that behaviour, and why not pausing or switching your SIP, and instead staying the course, is the ultimate strategy for achieving long-term financial freedom.
Record inflow, high stoppage ratio: A tale of two trends
The SIP stoppage ratio is the number of discontinued SIPs compared to the number of new registered SIPs. Keep in mind that the stoppage ratio also includes those SIPs that have matured, as well as any SIPs that have been switched.
This ratio is calculated using the formula:
SIP stoppage ratio = (Number of discontinued SIPs / Number of new SIPs registered) × 100
SIP stoppage ratios: June – November 2025
Source: AMFI, as of December, 2025
Scroll right to view full table –>
Looking at AMFI data from July to December 2025, one clear pattern emerges: the SIP stoppage ratio has consistently remained above 70%, with only a brief dip in July. Yet, surprisingly, this hasn’t dented the massive wall of money hitting mutual funds. Monthly inflows have steadily risen, increasing from ₹28,265 crore in August to ₹31,002 crore by December.
So, investors aren’t abandoning the mutual fund system altogether; rather, they are simply unwilling to remain stagnant.
When we compare the number of SIPs stopped against the number of new registrations, the picture becomes clear: Indian investors are in a state of constant churn. They are frequently moving in and out of schemes, chasing last quarter’s ‘top performer’, or panic-exiting during periods of volatility, only to re-enter a few weeks later.
Understand psychology behind pausing or switching SIPs
Up to this point, we have shared the statistics. But what lies behind those numbers? Why do you feel the urge to pause your SIP when the market tumbles, or feel the need to switch because another fund is delivering higher returns?
Instead of investing systematically, we often slip into a reactive mode. To break this cycle, we must understand why it happens. Let’s examine why our instincts often work against us.
Pausing SIP contribution when market dips
When markets drop, an investor’s first instinct is typically to pull back, pausing SIP contributions and waiting for a market recovery. This phenomenon is known as loss aversion bias. We tend to feel the pain of a loss twice as strongly as the joy of a gain, making short-term dips stand out more prominently than long-term opportunities.
What many overlook is that SIPs thrive on rupee-cost averaging. By investing a fixed amount every month, you automatically buy more units when prices are low and fewer units when prices are high.
Take the Covid-19 market crash as an example. The Nifty 50 Index plummeted by roughly 38%, falling from a peak of approximately 12,430 to a low of around 7,511 on March 23, 2020. This sharp drawdown caused many investors to stop or switch their SIPs, leading to a stoppage ratio that spiked to approximately 71%.
What followed caught these quitters off guard. The market recovered rapidly, gaining about 32.6% within 3 months and nearly 54.8% within 6 months. Those who stopped their SIPs missed out on the most aggressive part of the recovery. By the time the Nifty reclaimed its previous peak in November 2020, just 230 days later, those who had panicked were forced to re-enter at much higher levels.
The winners were those who stayed the course and managed their emotional biases.
So, what should you do when the market dips?
The answer is simple: Keep your SIP running. Don’t attempt to time the market by stopping when it’s down and re-entering when it’s high. Allow rupee-cost averaging to do the heavy lifting for you. If you can remain patient through an economic downturn, your chances of achieving long-term capital appreciation are much higher.
Chasing last year’s top-performing mutual funds
How do you choose your mutual fund? Do you consult a financial advisor to understand which funds you should invest in, or do you rely on a list of the top mutual funds for 2026? Or do you search for funds that provided the best returns last year?
If you base your investment decisions on mutual fund rankings or chase last year’s high performers, you might be in for trouble. Most of these lists are based on recent past returns, which can be misleading when choosing a mutual fund.
According to a survey by 1 Finance Magazine, no mutual fund managed to remain in the top 10 list from one three-year period to the next. For example, a fund that ranked No. 1 from 2015 to 2018 dropped to 58th place from 2018 to 2021. Many funds that ranked in the top 10 during one three-year period stumbled down to rankings of 50–300+ in the next three-year period. Only about 20% to 40% of these star funds remained in the top 100 in the subsequent window.
This occurs because we tend to fall for recency bias and chase last year’s golden fund. However, when you choose a fund this way and it underperforms, your first instinct may be to switch. To tackle this issue at its root, avoid chasing past winners for long-term returns. Instead, consult a Qualified Financial Advisor to help you choose your mutual funds wisely.
The mismatch: Starting with the wrong scheme
When expectations aren’t clear from the start, investors often find themselves switching funds midway, which means they never give any strategy a chance to work. This happens because many people don’t take the time to create a personalised asset allocation. Each investor has their own risk tolerance, and different types of funds behave in unique ways.
When these two factors don’t match, investing can become stressful, leading to confusion. This confusion occurs when the goal of steady growth clashes with the reality of a bumpy fund, making investors feel uncomfortable and pushing them to stop or switch.
For instance, many people are attracted to small-cap funds due to their potential for high returns. While these funds can grow a lot, they also come with significant ups and downs. If an investor expects a smooth journey, a sudden drop in value can feel like a crisis, rather than just part of regular market behavior. The fund might actually be performing as it should; the problem lies in how comfortable the investor is with risk.
This emotional disconnect is a big reason for the high stoppage ratios we’ve been seeing. Frequent switches based on fear or anxiety can actually harm your investment, as they disrupt the benefits of rupee-cost averaging. That’s why it’s important to talk about your investment plan with a financial advisor. An advisor goes beyond just looking at numbers; they consider your investment mindset and financial goals. They help you separate your strategy from your emotions, making sure your SIPs align with your long-term vision instead of reacting to short-term market fluctuations. When you feel anxious seeing your SIPs in the red, you will have someone to talk to who can help you stay calm and on track.
The compounding magic lost due to switching funds
A large number of SIP switches occur long before the true power of compounding can take effect. Meaningful compounding usually reveals its real strength only after 7 to 10 years. Yet investors often switch schemes prematurely, especially when they see repeated dips in the fund’s performance.
The example here comes from a real value‑oriented equity fund that has faced these highs and lows in real market conditions. Historical data reveals brutal drawdowns, but followed by stunning recoveries.
In March 2020, during the COVID-19 crash, this fund experienced one of its worst weeks, falling 15.34% between March 11 and March 18. A few weeks later, from April 2 to April 9, it had one of its best weeks, gaining almost 14%. Investors who remained invested saw a significant portion of that drop recover almost immediately.
A similar pattern occurred over a quarterly period. From December 23, 2019, to March 23, 2020, the fund declined by 31.48% as panic gripped the markets. However, from March 23 to June 23, 2020, the following quarter, it bounced back by nearly 40%. The decline and the recovery occurred back-to-back. Anyone who switched SIPs at the bottom missed the very phase that allowed long-term returns to recover.
Over the full year from March 23, 2019, to March 23, 2020, the fund was down 32.26%, which may seem alarming when viewed in isolation. Looking further back, in the previous one-year period from September 2013 to September 2014, the same fund rose by 104.70%. Exiting after a -32% phase may mean giving up on a fund that has demonstrated the ability to deliver very strong returns during favorable periods.
Consult a Qualified Financial Advisor from the start
To build long-term wealth through mutual fund SIPs, you must work with a Qualified Financial Advisor (QFA) from day one. Seek out a fiduciary financial advisor who prioritises your interests over their own. Keep in mind that mutual fund distributors earn commissions from selling funds, which can lead to biased recommendations.
Now your financial advisor should conduct a thorough risk profiling at the outset to gauge your behaviour around money. It will help you better understand your psychological response to financial decisions during different phases of your investment journey.
Based on your financial personality and long-term goals, your advisor will help you choose mutual funds. With the right funds, guidance from your Qualified Financial Advisor, and a yearly review of your portfolio, you can let your SIPs run their course, allowing them to fulfil your financial goals automatically.
