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Start it or Stop it: SIP in ELSS amidst the Market Turmoil

25 September 2020

Needless to say, we are currently going through unprecedented times, and there is a lot of uncertainty everywhere. This uncertainty and turmoil have had an impact on the financial markets too, and as investors, many of you would be worried about the safety of your investments. A common confusion is about continuing existing SIPs or starting new ones. So what should you do if you have an existing SIP or want to start a new one?

Understanding the basics:

Nobody, whether in the medical fraternity or government, has dealt with a situation like the current pandemic, so there are no clear answers or one right solution.

So what do we do? We focus on basics.

Beyond the fear and confusion, it is important to remember the basics of investing in a SIP in the current market turmoil:

  • SIPs are designed to beat the market fluctuations. As we know, markets do not remain constant; there are highs and lows. As you invest in a SIP over months and years, these highs and lows average out. When the markets are down, you will be able to buy more units which will average out when the markets are high. Continuity is important.
  • Investing in mutual funds should be viewed as a long term investment. If you go back and look at the various market crashes, the markets have historically emerged stronger. Don’t be dismayed by the short term losses and exit a SIP in panic. In a volatile market, there can be sudden highs and lows, don’t base your decision on those but stick to the financial goal you have in mind. Remain focused on the financial goal for which you started the SIP be it your child’s education or taking a luxury cruise!

 Should I start a new SIP?

You should start a new SIP if it fits your financial plans. If you want to start investing an amount every month for a specific goal or you feel the need to balance or diversify your portfolio, you could consider starting a new SIP.

Mrs. X wants to start investing in her newborn daughter’s college education, and she wants to invest Rs. 5000/month. Below is a table that compares the capital accumulated if she starts investing immediately or if she decides to postpone her investment by two years.


Investment Amount

No. of Years Invested

Expected Return

Capital Accumulated




Rs. 35,58,643




Rs. 27,29,048


A delay of 2 years in starting the SIP will reduce the corpus amount by Rs.8, 29,59; a reduction of almost 23%. So you must stick to your goals and start investing as per them rather than the market sentiments and conditions.

Should you exit an existing SIP?

You should not exit a SIP because the markets are in turmoil. If you need funds or the time frame you had in mind for the SIP is over, then exiting a SIP should be considered as an option. If you are faced with a liquidity crunch and are unable to invest every month, then also try and stay invested and invest whatever you can.

Financial decisions should be made with a clear head and not in a panic. These decisions should be based on long-term planning, historical data, calculations, and sound advice. You can use the following Wealth Builder Calculator for your financial planning or seek advice by getting in touch with us.


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