5 Reasons you should never skip an SIP instalment

5 Reasons you should never skip an SIP instalment

Think of your monthly SIP like your morning cup of tea. You wouldn’t dream of skipping it because it sets the tone for your entire day. Yet many investors pause their SIPs at the first sign of market trouble, not realising they’re sabotaging their wealth-building journey.

As a wealth manager who has seen countless portfolios grow from modest beginnings to substantial wealth, I can tell you that the investors who never skip their SIP instalments are the ones who retire comfortably. The ones who pause and restart based on market moods? They’re still working past their planned retirement age.

Let me share five compelling reasons why your SIP should be as non-negotiable as your electricity bill.

1. Rupee Cost Averaging Works Only When You’re Consistent

Rupee cost averaging is like shopping for vegetables at your local sabzi mandi. Some days tomatoes cost ₹40 per kg, other days they’re ₹80. If you buy tomatoes every week regardless of price, you end up paying an average price over time.

Your SIP works the same way. When markets are high, you buy fewer units. When they crash, you buy more units for the same amount. But this magic only works if you keep investing consistently.

Take the example of two investors who started SIPs in January 2020, just before the pandemic hit. Investor A continued his ₹10,000 monthly SIP throughout 2020-21, even when markets crashed 40% in March 2020. Investor B panicked and stopped his SIP from March to August 2020.

By December 2021, Investor A had accumulated significantly more units because he bought heavily during the crash months. His portfolio was worth 18% more than Investor B’s, despite both investing in the same fund. The difference? Consistency during the tough times.

2. Market Timing is a Myth That Costs You Money

Even seasoned fund managers with teams of analysts and sophisticated models can’t consistently time the market. So why do retail investors think they can?

The BSE Sensex has given positive returns in 28 out of the last 40 years. That’s a 70% success rate. But investors who tried to time their entries and exits have typically earned 3-4% less annually than those who stayed invested.

Consider this: If you had invested ₹1 lakh in the Sensex in 1991 and stayed put, it would be worth over ₹50 lakhs today. But if you missed just the 10 best days in these 30+ years, your corpus would be less than ₹20 lakhs.

The problem with stopping SIPs is that you’re essentially trying to time the market. You stop when things look bad and restart when they seem better. But by then, you’ve already missed the recovery.

3. Compounding Needs Time, Not Perfect Timing

Albert Einstein reportedly called compound interest the eighth wonder of the world. In India, we have a beautiful example in the form of the Brihadeeswara Temple in Thanjavur, which was built over 1,000 years ago. The temple’s endowment started small but grew to manage thousands of acres of land because the corpus kept growing uninterrupted for centuries.

Your SIP works similarly. Every month, you’re not just investing fresh money you’re also earning returns on your previous investments. When you skip instalments, you break this compounding cycle.

A ₹5,000 monthly SIP for 20 years at 12% annual returns creates a corpus of ₹49.96 lakhs. But if you skip just 24 months (two years) somewhere in between, your final corpus drops to ₹42.8 lakhs. That’s ₹7.16 lakhs less for missing just 10% of your instalments.

The loss becomes even more dramatic over longer periods. This is why starting early and staying consistent matters more than trying to optimise your entry points.

4. Market Volatility is Your Friend, Not Your Enemy

Most investors treat market volatility like monsoon floods something to avoid at all costs. But volatility is actually your biggest ally when you’re accumulating wealth through SIPs.

When markets are volatile, you get more units for your money during down periods. This is like getting bonus units at a discount. The more volatile the market, the more bonus units you accumulate.

Let’s say you’re investing ₹10,000 monthly in a fund. In a stable market, the NAV might move from ₹100 to ₹105 over six months. You’d buy roughly the same number of units each month.

But in a volatile market, the NAV might swing from ₹100 to ₹80 to ₹110 to ₹90 to ₹120. You’d buy many more units when the NAV is ₹80 and ₹90, and fewer when it’s ₹110 and ₹120. Your average cost would be lower, and your eventual returns higher.

Skipping SIPs during volatile times is like refusing to shop during a sale because there’s too much crowd at the store.

5. Discipline Creates Wealth, Not Market Knowledge

The most successful investors I’ve advised aren’t necessarily the ones who know the most about markets. They’re the ones who show up consistently, month after month, year after year.

Building wealth through equity investments is like training for a marathon. You don’t become a marathoner by running 21 km once. You become one by running consistently, even when you don’t feel like it, especially when you don’t feel like it.

Your SIP is your wealth-building discipline. Every month you invest, you’re voting for your future self. Every month you skip, you’re telling your future self that today’s comfort matters more than tomorrow’s security.

The beauty of SIPs is that they automate this discipline. Once you set up the mandate, the money gets invested whether you’re excited about markets or terrified of them. This removes emotion from the equation, which is where most investors go wrong.

Conclusion

Your SIP isn’t just an investment tool it’s your ticket to financial freedom. The investors who treat their SIPs as non-negotiable expenses are the ones who build substantial wealth over time. Those who pause and restart based on market conditions typically earn mediocre returns.

Set up your SIP, automate it, and then forget about it. Review your portfolio annually, but don’t let short-term market movements derail your long-term wealth creation.

Start treating your SIP like your rent payment something that happens every month, regardless of what’s happening in the world. Your future self will thank you for this discipline.

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