Why You Should Not Cancel Your SIP Within a Short-Term?

Reasons Why You Shouldn't Cancel

1. Missing Out on Rupee-Cost Averaging

   SIPs leverage the power of rupee-cost averaging, which involves buying more units when the market is low and fewer units when the market is high. This helps you acquire units at an average cost over time, mitigating the impact of market volatility. Cancelling your SIP during a downturn means you miss out on the opportunity to buy more units at a lower cost, potentially hindering your long-term returns. To calculate your returns on SIP investments, use an SIP Calculator. An SIP calculator is a tool used to estimate the potential returns on investments made through SIPs in mutual funds or other fund schemes. It helps investors plan their investments by calculating the future value of their SIP contributions based on factors like investment amount, duration, expected rate of return, and frequency of investment.

2. Disrupting Compounding Power

   Compounding is often referred to as the "eighth wonder of the world" by Albert Einstein, and for good reason. It allows your returns to generate additional returns, exponentially increasing your investment value over the long term. Cancelling your SIP disrupts this compounding process, potentially impacting your ability to achieve your financial goals.

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3. Market Timing is Difficult

   Predicting the exact market bottom is nearly impossible. By continuing your SIP, you avoid the risk of missing out on potential rebounds.

4. Financial Discipline

   SIPs promote a habit of regular saving and investment, which is crucial for long-term financial well-being. Canceling disrupts this discipline.

5. Flexibility with SIP Amounts

   Many platforms allow you to adjust your SIP amount. Consider reducing the contribution temporarily during financial needs instead of complete cancellation.

   

6. Power of Habit

   Regular SIP contributions become a habit over time. Cancelling can disrupt this habit and make it harder to restart later.

   Example: SIP Growth Potential

   Let's consider an example. Imagine you started a monthly SIP of Rs. 1,000 in an equity fund 5 years ago. The average annual return during this period was 12%. If you had continued your SIP, your investment value would have grown to approximately Rs. 1,01,592. However, if you had canceled your SIP after two years, your investment value would be significantly lower, at around Rs. 32,486. This demonstrates the significant difference that time and compounding can make in your investment journey.

SIP Calculator

I know my investment amount I know my goal amount

Monthly SIP Yearly SIP Lumpsum

I want to invest Pro Tip

Financial experts suggest that a person should invest 10-15% of their monthly income for long-term financial growth

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I want to invest for Pro Tip

Financial experts suggest that individuals should ideally invest for a period of 5 to 10 years, or even longer, to maximize the benefits of compounding and navigate market fluctuations effectively

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Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

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Total Wealth ₹22.4 L

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I want to save

I want to invest for Pro Tip

Financial experts suggest that individuals should ideally invest for a period of 5 to 10 years, or even longer, to maximize the benefits of compounding and navigate market fluctuations effectively

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Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

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Monthly Investment ₹22.4 L

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Top Funds with High Returns (Past 7 Years)

18.4%

High Growth Fund

17.46%

Top 200 Fund

14.57%

Accelerator Mid-Cap Fund II

14.81%

Opportunities Fund

10.58%

Growth Plus Fund

13.35%

Accelerator Fund

14.61%

Growth Opportunities Plus Fund

15.6%

Multiplier

11.48%

Equity Top 250 Fund

13.31%

Future Apex Fund

12.32%

Opportunities Fund

14.24%

Frontline Equity Fund

15.03%

Virtue II

10.88%

Pension Dynamic Equity Fund

11.8%

Equity Fund

10.32%

Blue-Chip Equity Fund