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

Systematic Investment Plans (SIPs) have become a popular investment choice due to their ease, affordability, and potential for long-term wealth creation. However, investors might be tempted to cancel their SIPs during market downturns or due to immediate financial needs. Here are a few reasons why you should not cancel your SIP within a short period of time.

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Save upto ₹46,800 in Tax
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  • Insurance Companies
  • Mutual Funds
Returns
Fund Name 5 Years 7 Years 10 Years
Top 300 Fund SBI Life
Rating
15.78% 13.6%
12.42%
View Plan
Opportunities Fund HDFC Life
Rating
21.9% 16.66%
14.7%
View Plan
High Growth Fund Axis Max Life
Rating
29.3% 22.69%
17.8%
View Plan
Pension India Consumption Fund ICICI Prudential Life
Rating
20.5% -
15.5%
View Plan
Multi Cap Fund Tata AIA Life
Rating
25.94% 22.89%
20.52%
View Plan
Accelerator Mid-Cap Fund II Bajaj Life
Rating
21.13% 14.65%
14.53%
View Plan
Multiplier Birla Sun Life
Rating
23.51% 17.02%
15.85%
View Plan
Pension Mid Cap Fund PNB MetLife
Rating
31.41% 24.68%
18.41%
View Plan
Equity II Fund Canara HSBC Life
Rating
16.82% 12.4%
10.88%
View Plan
US Equity Fund Star Union Dai-ichi Life
Rating
14.69% -
13.87%
View Plan
Fund rating powered by
Last updated: Oct 2025
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  Returns
Fund Name 3 Years 5 Years 10 Years
Active Fund QUANT 23.92% 31.48%
21.87%
Flexi Cap Fund PARAG PARIKH 20.69% 26.41%
19.28%
Large and Mid-Cap Fund EDELWEISS 22.34% 24.29%
17.94%
Equity Opportunities Fund KOTAK 24.64% 25.01%
19.45%
Large and Midcap Fund MIRAE ASSET 19.74% 24.32%
22.50%
Flexi Cap Fund PGIM INDIA 14.75% 23.39%
-
Flexi Cap Fund DSP 18.41% 22.33%
16.91%
Emerging Equities Fund CANARA ROBECO 20.05% 21.80%
15.92%
Focused fund SUNDARAM 18.27% 18.22%
16.55%

Last updated: August 2025

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Buying the Dip Results in Higher ReturnsBuying the Dip Results in Higher Returns

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.

    start-an-sip-today-watch-your-money-grow start-an-sip-today-watch-your-money-grow
  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 want to invest Pro Tip
Financial experts suggest that a person should invest 10-15% of their monthly income for long-term financial growth
/Month
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
Years
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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
View Plans
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
Years
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Expected return Pro Tip
Top 25% of investors consistently generate more than 12% return
% Annually
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Monthly Investment ₹22.4 L
View Plans
Top Funds with High Returns (Past 7 Years)
Equity Pension
12.6%
Equity Pension
Global Equity Index Funds Strategy
16.14%
Global Equity Index Funds Strategy
High Growth Fund
17.8%
High Growth Fund
Pension India Consumption Fund
15.5%
Pension India Consumption Fund
Multi Cap Fund
20.52%
Multi Cap Fund
Accelerator Mid-Cap Fund II
14.53%
Accelerator Mid-Cap Fund II
Multiplier
15.85%
Multiplier
Frontline Equity Fund
14.41%
Frontline Equity Fund
Pension Mid Cap Fund
18.41%
Pension Mid Cap Fund
Equity II Fund
10.88%
Equity II Fund
US Equity Fund
13.87%
US Equity Fund
Growth Opportunities Plus Fund
14.74%
Growth Opportunities Plus Fund
Equity Top 250 Fund
11.62%
Equity Top 250 Fund
Future Apex Fund
13.77%
Future Apex Fund
Pension Dynamic Equity Fund
11.51%
Pension Dynamic Equity Fund
Accelerator Fund
14.04%
Accelerator Fund

FAQs

  • What are some alternatives to cancelling my SIP during a financial need?

    Consider exploring options like pausing your SIP for a limited period if your investment platform offers it. You can also temporarily consider adjusting the SIP amount to manage your cash flow.
  • How can I make sure I stay disciplined with my SIPs?

    Set clear financial goals and link your SIP to them. Automate your SIP contributions to avoid the temptation of skipping instalments. Regularly review your investment portfolio but avoid making impulsive decisions based on short-term market movements.

˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
Disclaimer:#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. All SIPs listed here are of insurance companies’ funds. The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).

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