Now Reading: Stopping a SIP early can lose you its real benefit, data shows
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Stopping a SIP early can lose you its real benefit, data shows
The number of long-running systematic investment plans (SIPs) in direct plans fell sharply in FY26. Five-year-plus SIPs declined about 35%, while three-to-four-year SIPs dropped 56%, according to industry data. The SIP closure…
The Story in Brief
The number of long-running systematic investment plans (SIPs) in direct plans fell sharply in FY26. Five-year-plus SIPs declined about 35%, while three-to-four-year SIPs dropped 56%, according to industry data. The SIP closure ratio, discontinued accounts as a percentage of new ones, averaged 96% in the first quarter of FY27.
Experts say do-it-yourself investors are quitting SIPs without giving them enough time. Rolling return analysis from 2005 shows the odds of losing money shrink sharply over longer holding periods. For the Nifty 50, 14.2% of two-year SIPs ended negative, but zero at seven years. A pause of six months delays a 17-year goal by less than five months, leaving compounding intact.
The Indian Opinion
The narrative that young investors are impulsive and short-sighted gets repeated every time SIP closure ratios rise. But the real story is about access: DIY platforms make it trivially easy to start or stop, while the industry pushes products with short-term return expectations baked into their apps. The data shows even a 12-month break only delays a 17-year goal by nine months. The question investors should ask is not whether to pause, but whether they have a goal linked to each SIP in the first place.
Source: livemint.com
This story was synthesised by AI from the source linked above.
