SIPs in a Volatile Market: Should you increase, decrease, or pause your monthly investments during a downturn?

Market Volatility can feel like a roller coaster for investors. But if you are investing via a Systematic Investment Plan (SIP), your strategy doesn’t have to be as reactive as the market. During a downturn, the big question SIP investors face is: should I increase my SIP amount to take advantage of lower prices, scale back because of risk, or pause altogether? 

WHY SIPs ARE ESPECIALLY USEFUL DURING VOLATILITY?

When markets swing, SIPs offer a powerful advantage: rupee-cost averaging. With an SIP, you invest a fixed amount at regular intervals (say, every month), regardless of market conditions. If prices fall, you buy more units; if they rise, you buy fewer units. This approach helps to level out your average purchase price over time. This mechanism demonstrates one of the core SIP benefits from market volatility, turning short-term price chaos into a disciplined, long-term investment advantage.

WHAT THE DATA SAYS

To understand how SIPs and mutual funds are behaving in recent times, it’s helpful to look at government-sourced data from the SEBI.

• According to AMFI, SIP inflows reached a record high of Rs 29,445 crore in November 2025, an increase, not a decrease, during heightened market volatility. The number of active SIP accounts also rose, with Indian investors adding more SIPs in 2025 despite market uncertainty. 
  Source: https://www.amfiindia.com/uploads/AMFI_Monthly_Note_September2025_414d6bb2c3.pdf 

Source: https://www.valueresearchonline.com/stories/226869/3-reasons-why-sips-thriving-2025-volatility/ 

SHOULD YOU CONTINUE YOUR SIP DURING A DOWNTURN?

For most long-term SIP investors, YES, you should continue investing even in a volatile or declining market. Here’s why:

1. Long-term Objectives Matter More Than Short-Term Noise:
   If you are investing for objectives like retirement, education, or buying a home, the short-term dips often become opportunities, not disasters.
2. Rupee-cost Averaging Works Best When Prices Are Low:
   As prices fall, your fixed monthly SIP buys more units. Over time, your average cost can decrease, and when the market recovers, those extra units tend to generate significant upside.
3. Psychological Buffer: 
   Stopping an SIP in panic crystallizes losses. Staying invested prevents you from timing the market emotionally, which often backfires.
   
   

WHEN IT MIGHT MAKE SENSE TO INCREASE YOUR SIP

Increasing your SIP in a downturn is a disciplined way to buy more aggressively when valuations are attractive, but it’s not for everyone.

When increasing makes sense:

• You have extra, unused savings (emergency fund is intact)
• Your risk tolerance is still comfortable with volatility.
• Your time horizon is long (at least more than 5 years).

How to do it wisely:

• Incrementally, not all at once.
• Stagger Increases: Instead of increasing your SIP sharply in one go during a market fall, it’s safer to stagger the increase over a few months.
• Focus on consistently performing funds. 

WHEN IT’S SMART TO DECREASE/PAUSE YOUR SIP

You might need to cut or pause your SIP, but this should typically be for financial reasons, not just market fear.

Good reasons to decrease/pause:

• A major life change (job loss, medical emergency, etc.)
• You no longer feel comfortable with your risk exposure.
• You are nearing an objective and don’t want to increase risk.

Bad reason to stop:

• The market is down, and I am scared.

SIPs DURING MARKET VOLATILITY: GUIDELINES

Here are some actionable guidelines to follow when navigating SIP decisions during volatility:

1. Review your asset allocation, not just your SIP amount: 
   Use the downturn to rebalance. If equities have fallen, SIPs help bring you back in.
2. Stick with quality funds: 
   Increase or continue SIPs only in funds that align with your objectives and have consistent performance and reliable management.
3. Use a “staggered top-up” approach for increasing and spreading out the additional contributions.
4. Maintain a strong emergency fund: 
   Never increase SIPs at the cost of cash reserves.

CONCLUSION

Market volatility is temporary, but your financial needs are long-term. SIPs help you stay disciplined through the noise. Instead of reacting emotionally, evaluate your cash flow, risk capacity, and time horizon. Continue SIPs as the default, increase when opportunity meets preparedness, and pause only when life circumstances demand it. 

A steady, informed approach always wins over timing the market.