Falls are part of the deal
Equity markets go up and down. Sometimes they fall sharply, and sometimes they stay low for months or longer. Nobody can tell you when a fall will start or end, and that includes us. What you can control is how you respond.
When your mutual fund statement shows a loss, the natural reaction is to stop the SIP and wait. For a long-term investor, that is usually a mistake.
Your SIP buys more when prices are low
A SIP invests the same amount every month. When the NAV is low, that amount buys more units. When the NAV is high, it buys fewer. Over time this evens out your average cost. This is called rupee cost averaging.
Here’s an illustrative example, with made-up NAVs and a ₹6,000 monthly SIP:
| Month | NAV | Units bought |
|---|---|---|
| 1 | ₹50 | 120 |
| 2 | ₹40 | 150 |
| 3 | ₹30 | 200 |
| 4 | ₹40 | 150 |
You invested ₹24,000 and hold 620 units, at an average cost of about ₹38.71 a unit. At a NAV of ₹40 your units are worth ₹24,800, even though the NAV is still 20% below where it started. The units bought at ₹30 did that work. If you had stopped in month 2, you would have missed them.
Why stopping usually hurts
- You stop buying exactly when units are cheapest.
- A loss on paper isn’t a real loss until you sell. Selling in a fall makes it real.
- People who stop often restart only after prices have already risen, so they buy back higher.
- Breaking the habit is easy; building it again is hard.
What to check instead
A fall is a good moment to look at your plan, calmly:
- Your goal and time frame. If the goal is 5, 10 or 15 years away, a fall today matters much less than it feels.
- Money you need soon. If you need the money within a year or two, it probably shouldn’t be in equity at all. Talk to us about moving it to a safer option.
- Your emergency fund. Make sure a few months of expenses are kept aside, so you never have to sell in a fall.
- Your mix. If your equity share has moved far from your plan, rebalancing can bring it back. Sometimes that means adding to equity after a fall.
If you can, consider adding
If your income is steady and your emergency fund is in place, a fall can be a chance to step up your SIP rather than stop it. The step-up SIP calculator shows how raising your SIP a little each year changes the picture, at an assumed rate of return. Only add money you won’t need for a long time.
Talk to us before you act
If a fall is keeping you up at night, call or visit our team in Rajula before you stop or redeem. We’ll look at your goals with you and explain your options. The decision is yours, but it should be a calm one. You can also read our mutual fund SIP page or SIP vs FD.