Systematic Investment Plans, commonly known as SIPs, are a popular way for many people to invest regularly in mutual funds. SIPs are praised for helping to build wealth steadily over time. However, there are many myths surrounding SIPs that can cause serious financial harm—sometimes even more than a market crash. These misunderstandings can lead to bad investment decisions, lost returns, and disappointment. Understanding the truth behind these myths is essential for successful long-term investing.
One of the biggest myths is that SIPs give guaranteed returns, just like fixed deposits in banks. This is not true. SIPs invest in mutual funds, which are linked to the share market. This means their returns go up and down with the market. The idea that SIPs always give a certain return, like 12%, is misleading. In fact, a long-term study from 2003 to 2024 showed that SIPs in the Nifty 50 index gave an average return of about 6.7% per year before tax. This shows that returns are not fixed, and they depend on market performance and the time the investment is held.
Believing in fixed returns can lead to overconfidence. It can also cause disappointment when returns fall short of expectations, especially during short-term market dips. The risk is not in the market itself, but in expecting something that SIPs are not designed to offer—guaranteed profits.
Another common belief is that the date on which an SIP is scheduled each month can greatly affect the final returns. Some think investing at the start of the month is better, while others prefer the end of the month. But long-term studies prove this doesn’t matter much. One study that looked at SIPs in the Sensex from 1996 to 2023 found that the difference between the best and worst SIP dates was only 0.08%. This difference is so small that it makes no real impact on wealth creation over the years.
Even though short-term analysis from 2003 to 2024 showed that SIPs on futures and options expiry days did slightly better by 0.5% to 2.5% per year, this benefit disappeared over longer periods. Over many years, market movements even out, and what matters more is regular investing, not the specific date of the SIP.
Many people think that SIPs are only meant for people with small incomes and that they can only be used to invest in equity mutual funds. This is not true. SIPs can be started with as little as ₹500 per month, and recently, some fund houses have started allowing SIPs as low as ₹250 per month. This is being done to help people in smaller towns and rural areas start investing.
More importantly, SIPs are not just for equity funds. They can also be used to invest in debt funds, hybrid funds, index funds, and even thematic funds. This means that SIPs are flexible and can suit different kinds of investors, whether they want high growth or steady income. This myth can stop people from exploring better investment choices based on their goals and risk levels.
A false belief that causes stress among investors is that SIPs cannot be stopped or changed once started. The truth is, SIPs are very flexible. Most mutual fund companies allow changes to the amount, the investment date, or even the frequency of the SIP. It is also easy to pause or stop an SIP altogether if needed, without any penalty.
While this flexibility exists, stopping SIPs too often can hurt financial goals. Recent reports from 2025 showed that there are five major drawbacks to skipping SIP payments. These include breaking the power of compounding, missing out on cost averaging, falling behind on long-term goals, weakening financial discipline, and risking cancellation of the SIP mandate by the bank. So even though SIPs are easy to modify, staying consistent is what brings real success.
One of the worst mistakes investors make is to stop SIPs during market downturns. Market ups and downs are normal, but many investors panic when markets fall and stop their SIPs. This reaction often results in bigger losses than if the investment had simply continued.
In 2025, financial experts have been advising strongly against stopping SIPs during times of market volatility. They point out that during such times, SIPs actually help average the cost of investment. This means that when prices fall, the same SIP amount buys more units, which can lead to better returns when the market rises again. Continuing with SIPs during a downturn is one of the best strategies for long-term success.
It was also reported in 2025 that around 112 lakh SIP accounts were closed. This sharp decline shows that many investors got scared and exited their plans. Experts have said this should not be seen as a failure of SIPs, but as a sign that many investors still don’t fully understand how SIPs work. Panic decisions often do more harm than market crashes.
SIPs are powerful tools for building wealth, but only if used with the right understanding. Market crashes come and go, but myths can lead to wrong actions that hurt more in the long run. Believing that SIPs offer guaranteed returns, trying to time SIP dates, thinking SIPs are only for small or equity investors, assuming they are rigid, or stopping them during market falls—each of these mistakes can derail financial planning.
The most important lessons from the latest data and news in 2025 are clear. SIPs should be treated as long-term investments. The returns are not fixed, but the discipline of regular investing, the power of compounding, and the ability to average costs over time are what make SIPs successful. Keeping SIPs running, especially during tough market conditions, often brings better results than trying to time the market or chase short-term gains. Staying consistent and informed is the true key to making SIPs work.