Why Most Indians Exit SIP Investments Early

SIP in index funds is a good long-term strategy. We all know that by now.

But still ~46% of Equity Funds are redeemed within 2 years, as per AMFI (refer image).

For equity funds, it's recommended to stay invested for at least 7 years. However, most investors exit within 2-3 years.

Why is it so difficult to do SIPs consistently? What stops us?

Here are the top 5 reasons as per me:

1/ Unrealistic expectations of returns leading to impatience, eventually venturing into F&O

2/ Emotional decisions especially during market downturns

3/ Lack of emergency funds and adequate insurance forcing to sell investments at the wrong time

4/ Excessive borrowing and EMIs eating monthly cash flows

5/ No clear goal to stay committed to systematic investing

You might face these problems in your SIP journey as well.

Whenever in doubt, always remember why you started SIPs → "For long-term wealth creation"

Do not let the short-term noise distract you.

In the words of the late Mr. Charlie Munger: Hold the goddamn Index Fund.