Investors know better but still stop SIPs in crashes — SkimNews
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- Ripsy Bondia, assistant professor at IMI Delhi, frames SIP investing as falling in the quadrant of decisions that are intellectually simple but emotionally difficult, where the obstacle is execution, not knowledge.
- During the 2008-09 crisis, broader indices fell 60-65%, and equity mutual fund flows swung from net inflows of ₹12,700 crore in January 2008 to net outflows of ₹2,100 crore in December 2009.
- More recently, monthly equity mutual fund inflows fell nearly 30% — from ₹40,600 crore in June 2024 to ₹29,000 crore in June 2026 — despite no major crash and near-zero market returns over the period.
- During the 2008 crash, the Sensex plummeted nearly 60% in under 10 months; a ₹10 lakh index fund investment made at the peak would have shrunk to roughly ₹4 lakh.
- During the pandemic crash, the Sensex fell nearly 40% in just two months, with fear amplified by social media, messaging groups, news headlines and app notifications.
- Bondia advises investors to ask whether they are avoiding a decision because it is financially unsound or simply emotionally uncomfortable, arguing that buying during downturns rarely feels like an opportunity in real time — only in hindsight.
Why it matters: Retail investors who stop SIPs during downturns risk locking in losses and missing recoveries; the ₹10 lakh that became ₹4 lakh in 2008 became one of the best buying opportunities for those who held, but most pulled money out instead. The 30% drop in inflows over two flat years shows this panic behavior is happening even without a crash to trigger it.
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