Don’t stop your SIPs because the market is at an all-time high!

Published: January 20, 2024 at 6:00 am

In social media forums, many investors ask if they could stop their SIPs because the markets have hit an all-time high. We show that this is a needless and pointless thing to do,

The market hitting an all-time high is a fairly common event. This is not some “signal” for the market to “correct”. The graph below shows the Sensex closing price in a log scale, with red dots representing all-time highs (April 1979 to Jan 2023).

Sensex closing price in log scale with red dots representing all-time highs (April 1979 to Jan 2023)
Sensex closing price in log scale with red dots representing all-time highs (April 1979 to Jan 2023)

It is common for all-time highs to bunch together. Meaning the market often moves further up. So, stopping investments does not make sense even intuitively. Let us crunch some numbers. The following is an update of a previous study (linked below).

Let us consider a 15-year SIP with two scenarios

  • Normal SIP: We invest regardless of market conditions
  • Pause SIP with make-up: Here, the SIP is paused when the market hits ATH. When the SIP is resumed, the total paused amount is also invested. For example, if an Rs. 1000 SIP is paused for four months because the market was at ATH, the investment will be Rs. 1000 + total paused amount of Rs. 4000* in the fifth month.

* Please do not get fancy ideas about investing that amount in a liquid fund to get some “extra”. For a monthly interest of about 0.5% (before tax), there is no difference between keeping the paused amount in an SB account and a liquid fund.


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Each line in the plot below contains 358 15-year rolling SIP data points. There is practically no difference in return whether you invest without looking at market levels or whether you pause SIP during all-time highs and invest it later. Users interested in plotting rolling mutual fund SIP returns can consult the tools available in the freefincal investor circle.

358 15-year rolling SIP data points for normal SIP vs pausing SIPs when it is an all-time high and making up for it later
358 15-year rolling SIP data points for normal SIP vs pausing SIPs when it is at an all-time high and making up for it later

There is no practical difference between continuing your SIP and pausing your SIP because of market highs.  We must get used to investing systematically as soon as our income becomes available without fearing immediate loss. Waiting for the right time to invest is one of the worst mistakes you can commit. Always remember that loss is the shadow of return. You cannot shake it off. If you wait for returns, loss will also wait and strike after you invest (whenever possible!)

What If I have a lump sum to invest? Should I wait for the market to fall from an all-time high? Can I start an STP when the market is at an all-time high (ATH)? There is no practical difference between lump sum and STP investments started when the market was at an ATH and when the market was not at an ATH. See results here: Why SIP or lump sum investing need not be stopped when markets hit all-time highs!

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Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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