Should I Stop My Mutual Fund SIPs? Market is falling every day!

So all it took was just a few days of southbound market movement for questions like, “Should I Stop My Mutual Fund SIPs? Market is falling every day!” to start! Yesterday, I saw five such questions in Quora and readers have sent me similar emails. So if you are asking this question, here is why I believe that you should stop all your sips. If someone around you is asking such questions, do share this post and the video within to them.

Why you should stop your SIP now if you are worried about the market falling

So I posted a video about this last night, but before you get to that, some commentary if you don’t mind.

Should I Stop My Mutual Fund SIPs? Market is falling every day!

1: You are asking this question because you do not have an investment strategy!

2: If you stop your SIPs now, when will you restart? When the market has moved up again? That would be silly! In equity, you need to buy as many mutual fund units as possible when the market is falling (and your need is several years away) or when the market is not going anywhere. In the video below, I talk about the stock market as a wide staircase. This is what I mean: Are you ready to climb the Sensex Staircase?!

3: Stop your SIPs, and do the following

  • Have a clear financial goal, be clear about when you will need the money.
  • Find out how much money you will need for the goal using a reasonable inflation rate.
  • Does your goal need only fixed income or does it need equity as well?
  • If it needs equity, how much return can I expect after tax?
  • How much equity should my portfolio have?
  • How should I reduce the equity as my goal deadline nears?
  • How much should I invest for this goal in total?
  • For all the above steps, you can  Download the Freefincal Robo Advisory Software Template and work on it in the weekend
  • Are my current funds suitable for this goal?
  • If yes, continue, if not exit and use new ones.
  •  If you want new ones, you can select from My Handpicked Mutual Funds September 2018 (PlumbLine)

4: Does the above seem too much, too soon? Okay, then you re-assemble your financial life with this free -ebook and resume your SIPs if you want to. If you have a clear purpose, you do not need SIPs, you will be disciplined enough to invest on your own each directly at the AMC sites.

5: Did you think that the market would just keep moving up? Excuse me, that is stupid.  You need to super-patient if you want equity to work.  This is the gain or loss in my full equity portfolio. You can see more details at : Ten Years of Mutual Fund Investing: My Journey and lessons learned

Notice that for the first five years, returns were zero and then it zoomed up. That period when you do not get any returns is the best time for you to invest in equity! Unless you are ready to appreciate this, exit from equity.

Now watch: Should I Stop My Mutual Fund SIPs?

Do consider exploring the other videos in the freefincal youtube channel, there are about 300+ of them.

How to reduce risk when you are running a SIP?

It is not enough if you simply start a SIP, you should also manage the risk associated with it. Always, focus on the money in the market, that is your current investment value and do not focus on your next investment.

Continue your next investment, but keep an eye on your asset allocation. That is how much of equity does your portfolio have. Or equity value divided by portfolio value (for a particular goal). Say you want this to be 60% and this has increased due to a bull run to 70%; Then remove that 10% and invest in fixed income. This is known as rebalancing.

Do this rebalancing at least once a year and that will reduce quite a bit of risk. Then if you hold 60% equity for a goal that is ten years away, after a few years (say 4) reduce it to 40% and then after 3-4Y reduce it to 20% and then down to zero.

So reducing risk is a simple three-step process:

1: Invest right (use the robo template to find out)

2: Rebalance each year

3: Reduce equity exposure in a step-wise manner ignoring tax and exit load.

4: You can continue investing while you do all this as per the current asset allocation (equity and fixed income ratio) It is as simple as that!!

Resources to manage your portfolio

To understand what is asset allocation, watch:

To learn more about portfolio rebalancing, watch this:

If you want to know how much equity you should hold, watch this.

To learn more about how to reduce risk in the portfolio, watch:

Unless you are ready to understand the risks associated with equity investing, please stop your SIPs.  Ignorance is the biggest risk. Ignorance is not a crime, staying ignorant is. A crime you commit against your dreams and the well being of yourself and your family.


Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media

Do check out my books

You Can Be Rich Too with Goal-Based InvestingYou can be rich too with goal based investing

My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create customg solutions for your lifestye!Get it now.  It is also available in Kindle format.

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Create a "from start to finish" financial plan with this free robo advisory software template

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

About Freefincal

Freefincal has open-source, comprehensive Excel spreadsheets, tools, analysis and unbiased, conflict of interest-free commentary on different aspects of personal finance and investing. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. We do not accept sponsored posts, links or guest posts request from content writers and agencies.

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

3 thoughts on “Should I Stop My Mutual Fund SIPs? Market is falling every day!

  1. Hi, Pattu. This might be a silly question, but here it is: Is the stock market, particularly in India, manipulated by big players? What is the logic in the index crashing by 1000 points one day and rising by 600 points the next day, given that a country’s economy takes a long time to slow down or pick up? Vasuki Rao

  2. Dear Pattu,
    You article give a good scenario. When my portfolio shows a loss of 10% in my equity funds and when I am not sure of its increase and its level from the current position, how should be my strategy ? I have been investing over a period of 6 years through sip, and my returns as on today gives me a big puzzle.

Comments are closed.