Let’s start with an uncomfortable question.
If SIP is so good… why do so many investors feel disappointed with it?
You’ve seen the chatter:
“SIP doesn’t work in sideways markets”
“Mutual funds are just average returns”
“Direct investing is better”
And honestly, after a correction or 2–3 years of flat returns, this frustration feels justified.
But before we jump to conclusions, let’s understand something clearly.
—> SIP is not a return strategy.
—> SIP is a behaviour strategy.
And that one difference changes everything.
The Expectation Gap Nobody Talks About
Most investors start SIP with an expectation:
“If I invest regularly, I should see good returns every year.”
Sounds reasonable. But markets don’t operate on annual report cards.
Let’s look at facts.
Indian equity markets have delivered ~11–13% CAGR over long periods (15–20 years)
But in between, there are multiple years of flat or negative returns
Example:
2008: ~–50% drawdown
2011–2013: almost no returns
2018: midcap crash (~–25% to –40%)
2022: global volatility
2025–26: recent corrections
So if your expectation is:
“Smooth, predictable growth” - You will always feel SIP is failing.
Because markets are not designed to be smooth.
Where Most Investors Get It Wrong
Let’s be honest about behaviour. Typical investor journey:
Starts SIP in a bull market
Sees good returns → feels confident
Market corrects → starts doubting
Stops SIP → “will restart later”
Market recovers → re-enters late
This is not a SIP problem.
This is a behaviour problem.
Now Let’s Look at What Data Actually Says
There’s a simple but powerful insight from multiple market studies globally:
A large portion of long-term returns come in a few short periods.
For example:
Missing just the best 10–15 days in a decade can reduce returns drastically
These best days often come immediately after sharp corrections
Which means:
The moment you feel most uncomfortable…
is often the moment when future returns are getting built.
Now think. Can anyone consistently predict those days?
Even professionals struggle.
Let’s move from theory to reality.
Same market. Same fund.
Only difference — behaviour.
Market Phase | Action Taken | Midcap SIP Return | Large Cap SIP Return |
|---|---|---|---|
2009 Crash | Stopped SIP | -17% | -8% |
2009 Crash | Continued SIP (6 months) | +22% | +12% |
2013 Volatility | Stopped SIP | -5.7% | -2% |
2013 Volatility | Continued SIP | +6.2% | +4% |
2025 Correction | Stopped SIP | -1% | -2.1% |
2025 Correction | Continued SIP | +17.8% | +13.1% |
Notice something interesting?
The market didn’t change. The investor did.
And that one decision — to continue or stop —
quietly decided the outcome.
So What Does SIP Actually Do?
SIP solves one problem extremely well:
It ensures you are present when returns happen.
That’s it. No magic. No prediction.
Just participation.
Why SIP Works (When It Feels Like It Shouldn’t)
During market corrections:
Prices fall
Your SIP buys more units
During recovery:
Markets rise
Those extra units amplify returns
This is called rupee cost averaging.
But more importantly:
It forces you to do the hardest thing in investing —
keep investing when it feels uncomfortable.
The “Scam” Narrative — Where It Comes From
Let’s address the elephant in the room.
Why do people call SIP a scam?
Because they experience:
2–3 years of low returns
Market corrections
Comparison with someone who picked the “right stock”
And they conclude:
“This doesn’t work.”
But here’s the reality - Short periods don’t define long-term outcomes.
Can You Beat SIP? Yes.
SIP is not the highest return strategy.
A skilled investor can outperform SIP
Concentrated investing can generate higher returns
But here’s the real question:
Can most investors consistently do that?
That requires:
Timing markets correctly
Managing emotions
Staying disciplined through volatility
For most people, that combination is difficult.
A Practical Way to Look at It
Think of SIP like building a habit.
You don’t go to the gym expecting results in 2 months.
You go because:
You know consistency works. Investing is no different.
What Should You Actually Do?
If you are running SIPs today:
Link them to clear goals (retirement, education, wealth creation)
Give them time (minimum 5–7 years)
Continue during market corrections
Avoid checking returns too frequently
Final Thought
SIP is not designed to impress you.
It is designed to protect you from your own mistakes.
Because in investing:
The biggest risk is not the market.
It is how we react to the market.
So next time you hear: “SIP doesn’t work…”
Ask a better question:
“Was SIP continued long enough?”
Because wealth is not created by finding the perfect strategy.
It is created by staying with a good strategy long enough.
Warm regards,
Tejas
PS: Rs. 2 lakhs SIP over 10 years build a corpus of anywhere between Rs. 5 crore to 7 crore. However, continuing for 10 years is generally the hard part for investors.
