BUSINESS

Why Quitting SIPs Within 3 Years Can Cost You Lakhs: Expert Explains

Starting a Systematic Investment Plan (SIP) is easy, but staying invested requires discipline. Many Indian investors give up within the first few years, often due to market volatility — a decision that can cost them lakhs in lost wealth.

The Hidden Cost of Early Withdrawal
According to CA Abhishek Walia, co-founder of Zactor Money, nearly 90% of Indian investors stop their SIPs within three years. Emotional reactions to market dips often lead to this short-term panic.

Walia explains the common cycle:

Year 1: Excitement; returns look good
Year 2: Market dips; panic; SIP stopped
Year 3: Market recovers; regret; SIP restarted

Stopping early interrupts the compounding process, which is the core benefit of long-term investing.

The Power of Staying Invested
Consider this example: investing Rs 5,000 per month for 20 years at an average return of 12% can grow your corpus to around Rs 45 lakh. Pause the SIP for just three years, and you could lose over Rs 15 lakh in potential gains.

“Compounding needs time and patience, not perfection,” Walia reminds investors. Skipping SIP instalments delays your wealth-building journey significantly.

SIPs Perform Best During Market Downturns
Investors often quit when markets fall, but downturns are opportunities. Lower prices allow you to accumulate more units, boosting long-term returns when markets recover.

“Don’t turn off your SIP during the tough years — that’s when it works best,” Walia advises.

Key Takeaway:
SIPs reward discipline, not timing. Staying invested through market highs and lows separates successful investors from the rest. Time in the market truly beats timing the market.