Regular SIPs vs Buying on Market Dips: What Works Best?

Your neighbour brags about buying stocks during the 2020 crash and doubling his money. Meanwhile, you’ve been quietly putting ₹10,000 every month into a mutual fund through SIP. Who made the smarter move?

This question keeps many investors awake at night. Should you invest a fixed amount regularly, or should you wait for the market to fall and then pounce? Let’s settle this debate once and for all.

Understanding the Two Approaches

Before we compare, let’s be clear about what we’re discussing.

1. Regular SIPs (Systematic Investment Plans): You invest a fixed amount at regular intervals monthly, quarterly, or whatever suits you. The amount stays the same whether the market is at an all-time high or in the dumps. It’s automatic. It’s disciplined. It’s boring in the best possible way.

2. Buying on Dips: Here, you wait for market corrections or crashes. When the Nifty falls 10% or 15%, you deploy your capital. The idea is simple buy low, sell high. Between dips, your money sits in a savings account or liquid fund, earning modest returns.

Both approaches have merit. But which one actually works better for most people?

The Case for Regular SIPs

Think about how most of us earn money. You get your salary on the first of every month. Not when markets fall. Not when you feel optimistic. Every single month, without fail.

SIPs work beautifully with this income pattern. Here’s why they make sense:

They remove emotion from investing. When markets are soaring, everyone wants to buy. When they’re crashing, everyone wants to sell. SIPs force you to do the opposite you’re buying when others are fearful and buying when others are greedy. You don’t need to make any decision. The process makes the decision for you.

You benefit from rupee cost averaging. Let’s say you invest ₹10,000 every month in a fund with a NAV of ₹100. You get 100 units. Next month, if the NAV drops to ₹80, you get 125 units. The month after, if it rises to ₹120, you get 83 units. Over time, your average purchase price smooths out. You automatically buy more units when prices are low and fewer when prices are high.

They build discipline without effort. Most people who plan to time the market end up not investing at all. They wait for the perfect entry point that never comes. Or they get scared when the actual dip happens. SIPs eliminate this paralysis. Your money gets invested regardless of how you feel.

The power of compounding works longer. Every rupee invested today has more time to grow than a rupee invested tomorrow. When you wait for dips, your money sits idle. With SIPs, every instalment gets maximum time in the market.

Let me share some data. Between 2001 and 2023, if you had invested ₹10,000 monthly in a Nifty 50 index fund through SIP, you would have built a corpus of approximately ₹1.2 crore on a total investment of ₹27.6 lakh. That’s an annualised return of around 12-13%. No timing needed. No stress. Just consistent investing.

The Case for Buying on Dips

Now, buying on dips isn’t a terrible strategy. It has its moments of glory.

You get better prices. This is obvious. If you buy when the Nifty falls 15%, you’re getting shares cheaper than someone who bought at the peak. When markets recover and they always do eventually your returns are higher.

Your average cost is lower. If you successfully time even a few dips over the years, your overall average purchase price will be lower than someone who invested regularly regardless of market levels.

It feels smarter. There’s a psychological reward in catching a falling knife and watching it bounce back. You feel like you’ve beaten the system.

Between 2008 and 2023, the Nifty saw several corrections of 10% or more. If you had successfully invested during each of these dips, your returns would have beaten regular SIPs. But here’s the catch that’s a very big “if.”

Where Dip-Buying Falls Apart

The problem with this strategy isn’t the theory. It’s the execution.

How do you define a dip? Is it 5%, 10%, or 20%? During the 2020 crash, markets fell 40% from peak to trough. Should you have bought at 10% down? If you did, you’d have seen your investment fall another 30%. Would you have had the courage to buy more? Or would you have panicked and sold?

You need cash ready. To buy dips, you need a pool of money sitting idle. That money earns almost nothing while it waits. Over 10-20 years, this opportunity cost is massive. If markets rally for five years straight (as they did from 2013 to 2018), your idle cash generates 4-5% while the market delivers 15%.

You’ll hesitate when the time comes. This is the killer. When markets actually fall, the headlines are terrifying. “Nifty crashes 1000 points!” “Recession fears grip economy!” “Foreign investors flee!” Will you really have the stomach to invest when everyone around you is panicking? Most people don’t. They wait for more clarity. But by the time clarity arrives, the dip is over.

You can’t predict when dips will come. Sometimes markets go years without a meaningful correction. From 2003 to 2007, the Nifty went from 1,000 to 6,000 with only minor pullbacks. If you were waiting for a big dip, you missed a six-fold gain.

Studies show that most retail investors who try to time the market underperform those who invest regularly. The average equity mutual fund investor in India earns 2-3% less annually than the fund itself simply because of poor timing.

What the Data Really Shows

Here’s what we’ve observed over 15+ years of managing client portfolios: Regular SIPs beat dip-buying for 90% of investors.

Between 2008 and 2023, we tracked two imaginary portfolios. One invested ₹10,000 monthly without fail. The other waited for dips of 10% or more. The dip-buyer invested larger amounts but only during corrections. On paper, the dip portfolio should have won. But it didn’t at least not by much. The difference in final corpus was less than 5%, and that’s assuming perfect execution of the dip-buying strategy.

In reality, when we account for human behaviour the hesitation, the fear, the missed opportunities SIPs came out significantly ahead.

A Hybrid Approach That Actually Works

You don’t have to choose one or the other. Here’s a practical middle path:

Keep your core SIPs running. Invest a fixed amount every month, no matter what. This is your disciplined, long-term strategy. Don’t touch it.

Build a cash buffer for opportunistic buying. Set aside 10-20% of your investment capital in a liquid fund. This is your dip-buying ammunition. When markets fall 15% or more from recent highs, deploy this money. But only this money never stop your regular SIPs.

This hybrid approach gives you the best of both worlds. You’re consistently invested, but you’re also ready to capitalise when genuine opportunities arise. You won’t feel the pain of having all your money idle, and you won’t miss out on buying cheap stocks during crashes.

To Sum Up

For most investors, regular SIPs are the better choice. They’re simpler, less stressful, and historically effective. Trying to time the market sounds smart, but it’s exceptionally hard to execute. The psychological barriers fear, greed, analysis paralysis are too strong for most people to overcome consistently.

Start your SIP today if you haven’t already. Choose an amount that won’t hurt your monthly budget, automate it, and let it run for at least 10 years. If you want to add a dip-buying component, keep it small maybe 10-15% of your total investment allocation.

The real wealth is built not by being clever about timing, but by being consistent about investing. Your neighbour who bought during the 2020 crash got lucky once. You, with your boring monthly SIP, are building wealth systematically. That’s a better story, even if it’s less exciting at dinner parties.