The post-pandemic period was kind to new SIP investors, some of whom ended up seeing incredible CAGRs of over 20% (compare that to the long-term average historical return for Indian stocks, which has ranged between 10% and 13%1).
However, in the equity markets, all that goes up must come down: indeed, several indices have seen recent corrections of between 10% and 15%2. Your funds have likely mirrored this performance, with slight variations.
And at this point, no one would blame you for being spooked: once you’ve seen a multi-year stint of outperformance, it’s difficult to digest spells of middling or negative returns.
But it’s precisely at such times that SIP investors need to be reminded of some core ideas that can maximise their returns.

So here are five key principles to keep in mind at this crucial juncture:

1. The Golden Rule of SIPs: NEVER EVER STOP.

A consistent SIP removes the need for expert opinions (even ours!), reports, and other complications. By investing during ups and downs alike, what you get are average valuations, volatility, and returns.
How is this a good thing? You see, most investors don’t even get average returns, because they let their emotions rule their decision-making. So don’t be like most investors.
SIPs provide structure and reliability. Halting your SIPs destroys the mathematical advantage inherent in compounding.

2. Past returns are irrelevant to future performance

When you buy stocks or indices that have done well in the recent past, you risk ending up with a bag of overvalued equities. This is a pretty bad position to be in: you could get bond-like low returns with stock-like high volatility.
For instance, the small- and mid-cap (SMID) segment has been quite expensive over the past few quarters, and has only now begun a mean reversion, with some way still to go. This means that starting an SIP now on the basis of this segment’s recent performance isn’t a good idea, since a near-term correction seems to be on the cards.
Similarly, abandoning your SIPs when your preferred segments hit a rough patch is also a costly move: the image below demonstrates this for the small-cap segment.

3. Investing isn't a game — even though it increasingly looks like one

Investing is becoming more and more gamified. A simple swipe can now let you experience a rollercoaster of emotions, including the thrill of an investing “win”.
This ease means you’re more likely to buy or sell equities or funds in response to the news, opinions, or rapid market swings (or just for an adrenaline hit). A higher volume of transactions translates to higher costs, which reduce overall returns.
So don’t confuse ease of investing with market-timing skills, and don't let thrill-seeking control your investments. If you have a plan you put together with a cool head, resist the urge to tinker with it!

4. For new SIPs, timing is irrelevant

If you just recently started a SIP, or are thinking about doing so, know that timing doesn't matter that much in the long run. In fact, funnily enough, starting with a quality investment at a peak might help you stay invested longer.
How? Well, if you get low or negative returns early on, you lower your expectations going forward, which makes it more likely (and slightly easier!) to stay invested when the going gets tough.
The image below argues for this point using SmallCap index data.

5. Bear market for prices = bull market for units

Unless you’re leveraged or over-exposed to equities, falling prices might actually be a good thing!
Why? Because lower prices mean more units for the same SIP amount.
Thus, “bear markets” are actually an opportunity to accumulate more units and improve your odds of stronger long-term returns — provided your investments are sound, of course.
The bottom line? Stay the course and don't panic. Remember: this is exactly what your SIP is designed for!
This is an adaptation of an original tweet by Sahil Kapoor.

A Note to SIP Investors (Not for Lumpsum & Market Timers)

Many of you have started your SIP journey in the last five years. Data shows that nearly 3 in 4 existing SIPs were initiated during this period. Many who began investing in the aftermath of the pandemic have enjoyed… pic.twitter.com/LbQBk1FdPJ

— Sahil Kapoor (@SahilKapoor) February 11, 2025

If you’d like to learn more about how SIPs can benefit you, simply click here to reach out to our experts.

1 Source: DSP Internal
2 Source