Why investors pause SIPs when markets crash: study

A behavioural finance analysis explains why investors often stop systematic investment plans (SIPs) during market downturns, despite knowing that staying invested is the right strategy. Ripsy Bondia, assistant professor at IMI Delhi, categorises investing in SIPs as a decision that is intellectually simple but emotionally difficult, placing it in the same quadrant as eating healthily or exercising regularly.

During the 2008-09 financial crisis, broader indices fell 60-65%, and equity mutual-fund flows swung from net inflows of Rs 12,700 crore in January 2008 to net outflows of Rs 2,100 crore in December 2009. More recently, despite no major crash and near-zero returns over two years, monthly equity mutual fund inflows fell by nearly 30% to Rs 29,000 crore in June 2026 from Rs 40,600 crore in June 2024.

The analysis, published by Livemint, attributes this behaviour to emotional factors such as fear of portfolio loss, anxiety amplified by social media and news headlines, and concerns about job security during crises. The key to overcoming this, according to the article, is distinguishing between decisions avoided because they are financially unsound versus those avoided simply because they are emotionally uncomfortable.