My SIP Investments Are in Losses. I Have Been Investing in Mutual Funds Since 2020. Should I Stop Now and Shift to Safer Options?
March 12, 2025
Many investors who have been investing in mutual funds through Systematic Investment Plans (SIPs) since 2020 are seeing their portfolios in the red due to recent market downturns. With rising concerns over portfolio losses, some investors are wondering whether they should stop their SIPs and shift to risk-free investment options.
Market Volatility and SIP Performance
The stock market has faced fluctuations over the past year, impacting equity mutual fund returns. Investors who started SIPs during the post-pandemic market rally might now be experiencing negative or stagnant growth. However, financial experts suggest that stopping SIPs during a downturn might not be the best strategy.
“SIPs are designed to average out the cost of investment over time. By stopping now, investors might miss out on the opportunity to buy at lower prices and benefit from future market recoveries,” said a senior financial advisor.
Should You Shift to Risk-Free Investments?
Risk-free investments like fixed deposits (FDs), public provident funds (PPFs), and government bonds offer stable returns but may not keep pace with inflation over the long term. While these instruments provide capital protection, they generally yield lower returns compared to equities in the long run.
Financial planners recommend a balanced approach—instead of completely shifting to risk-free instruments, investors should evaluate their risk appetite, financial goals, and time horizon.
What Should SIP Investors Do?
- Stay Invested for the Long Term – Equity markets are cyclical, and downturns are temporary. Historically, markets have always recovered over time.
- Review and Rebalance – Check your mutual fund portfolio and ensure it aligns with your risk tolerance. Diversification can help manage risks.
- Increase SIPs During Market Lows – If financially feasible, increasing SIP contributions during a market downturn can enhance long-term gains.
- Consider a Hybrid Approach – A mix of equity, debt, and fixed-income investments can provide both stability and growth potential.
Experts suggest that unless an investor’s financial situation has drastically changed, stopping SIPs may not be the ideal decision. Instead, maintaining a disciplined investment approach and regularly reviewing one’s portfolio can help navigate market volatility effectively.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a financial advisor before making investment decisions.
