India’s recent boom in Systematic Investment Plans (SIPs) appears impressive on the surface — but a deeper look reveals a worrying trend of mass cancellations. In 2025, around 86% of newly launched SIPs were terminated. This surge in exits has been attributed to market volatility, investor jitters, mis-selling and short-term behaviour.
October 2025 saw a record monthly inflow of Rs. 29,529 crore into mutual funds through SIPs. Despite this, the high stoppage ratio raises questions about how many investors are sticking through to reap the benefits of compounding over the long term. Analysts warn that unless there is greater transparency and sustained discipline, India’s much-vaunted SIP engine risks becoming a cycle of rotation rather than a path to wealth creation.
Some market observers point out that a high dropout rate does not necessarily imply reduced overall investment; many investors may be shifting from poorly performing funds to newer ones rather than exiting the mutual fund system altogether.
The concern remains that frequent SIP stoppages — especially during volatile market phases — can significantly blunt the power of rupee-cost averaging and compound growth, which are the core advantages of SIPs.
Conclusion
The headline SIP numbers mask a deeper challenge for India’s mutual-fund landscape. High dropout rates threaten the long-term wealth creation potential of SIPs. If investors lose confidence or abandon SIPs amid market volatility, the promise of steady compounding and disciplined investing could be compromised.
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