Invest in SIPs for the Long Term, Like Warren Buffett. Don't be intimidated by market fluctuations; leverage the power of compounding to grow your wealth.
Mutual Fund SIPs: Amidst the ongoing market volatility and increasing global uncertainty, investors are experiencing apprehension. Many are considering halting their SIPs (Systematic Investment Plans), but experts advise against it. According to investment specialists and Ventura Fund House, market fluctuations are inherent and a normal part of investing.
The Impact of Market Downturns on Investor Sentiment
They argue that market corrections following periods of growth are natural, and these times can present opportunities for investors. Most investors increase their investments during market booms, but during downturns, they often halt or close their SIPs due to panic. However, history shows that patient investors reap greater profits in the long run.
SIP Stoppage Ratio Exceeds 100% for the First Time
Currently, the SIP stoppage ratio has surpassed 100%, indicating that many investors are considering pausing or terminating their SIPs. According to Ventura's research, new SIP registrations declined by 21% by the end of 2024, while SIP cancellations also saw a sharp 11% decrease. Despite this, from December 2024 to January 2025, new SIP registrations increased by 4%, while cancellations surged by 37%. This reflects growing investor anxiety and a wait-and-see approach.
Building Wealth Through Long-Term Investment
Many investors believe that pausing SIPs during downturns and waiting for better times will yield higher returns. However, consider this example: If an investor had invested ₹1,000 monthly via SIP for 25 years with a 12% annual return, their investment would grow to approximately ₹17 lakh. Conversely, if another investor invested with a 15% return for 15 years, their investment would reach approximately ₹6.2 lakh. This comparison clearly demonstrates that even with higher returns, long-term investors gain significantly more.
Warren Buffett's Investment Philosophy
To further illustrate this point, consider Warren Buffett. He began investing with just $1 million at the age of 30 in 1960. By age 56 in 1986, his net worth reached $1 billion, and in 2025, it had grown to $161 billion. His investment approach proves that the real power of wealth creation lies not in high returns, but in the power of time.
The Benefits of Compounding Through Long-Term SIP Investments
Ventura's report shows that consistent investment, rather than halting SIPs, maximizes the benefits of compounding. For instance, if an investor had started a ₹1,000 SIP on March 1, 2000, halting it during the 2008 global recession or the 2020 COVID-19 pandemic would have significantly impacted returns.
The Impact of Compounding: Growing Wealth Over Time
According to the report, an investor who consistently invested in SIPs from 2000 to 2025 would see their investment grow to ₹17 lakh, while those who stopped mid-way would have a considerably lower investment value. Furthermore, the report highlighted the impact of compounding, where even small investments can grow exponentially over time.
Building Wealth Through Consistent Long-Term Investment
Ventura's report also demonstrates the advantage of compounding over time. If someone had started a ₹1,000 SIP in PPF for 20 years, their investment could grow from ₹5.2 lakh to ₹8 lakh, highlighting the increased returns from long-term investment.
