Despite an increase in Systematic Investment Plan (SIP) contributions, the number of SIPs discontinued has risen sharply. In January 2025, the SIP stoppage ratio (the number of SIPs cancelled compared to new ones started) reached 109%, meaning more SIPs were cancelled than newly registered.
According to the Association of Mutual Funds in India (AMFI), while 56.19 lakh new SIPs were started in January 2025, 61.33 lakh were discontinued. This is a significant shift from previous months when more SIPs were registered than cancelled.
| Month | New SIPs Registered (in lakhs) | SIPs Discontinued (in lakhs) |
|---|---|---|
| Jan 2025 | 56.19 | 61.33 |
| Dec 2024 | 54.27 | 44.90 |
| Nov 2024 | 49.47 | 39.14 |
Why Are Investors Stopping SIPs?
1. Market Decline and Investor Fear
Many investors are worried about the falling stock market. Seeing their investments lose value daily has affected their confidence in equity mutual funds.
“Retail investors are nervous due to the continuous fall in the share market. Other investment options like gold and debt funds are giving better and more stable returns. This is making investors stop their SIPs.”
2. Shift Towards Fixed-Income Investments
Some investors, especially high-net-worth individuals (HNIs), are moving their money from SIPs to Fixed Deposits (FDs) and debt funds to reduce risk.
“Many investors are stopping SIPs and shifting their money to FDs and bonds. This is a part of their asset allocation strategy to reduce exposure to equity.”
Is This a Serious Concern?
While SIP cancellations are high, experts believe it is not a major issue. The overall SIP contributions have increased, showing that investor participation remains strong.
“SIP cancellations happen for various reasons, such as profit booking, reaching financial goals, or portfolio adjustments. If we focus only on the stoppage ratio, it can be misleading. The most important number is the net SIP inflow, which stood at ₹26,400 crore in January 2025, a 40.1% increase from ₹18,838 crore last year. This shows that SIP investments are growing overall.”
Conclusion
The rise in SIP cancellations in January 2025 reflects investor fears due to the falling stock market. Some are shifting to safer assets like FDs and debt funds, while others are reacting to market volatility.
However, experts advise that this is the best time to continue investing. Market downturns provide an opportunity to buy more units at lower prices, which can benefit investors when the market recovers.
Despite the higher cancellation rate, SIP contributions are at an all-time high, proving that many investors still believe in mutual funds for long-term wealth creation.
