Systematic Investment Plans (SIPs) have long been promoted as one of the most disciplined and effective ways to build long-term wealth through mutual funds. However, recent data suggests that investor sentiment is shifting. According to the latest figures released by the Association of Mutual Funds in India (AMFI), SIP discontinuations surged sharply in December 2025, raising concerns across the investment community.
AMFI data shows that the SIP stoppage ratio climbed to nearly 85% in December 2025, meaning that for every 100 new SIPs started, around 85 were either paused or discontinued. This unusually high ratio has triggered questions about whether investors are losing confidence in mutual funds or facing financial pressures that force them to stop investing.
The broader mutual fund industry has also shown signs of stress. Equity mutual fund net inflows declined by 6.21% in December 2025, falling to ₹28,054.06 crore from ₹29,911.05 crore in November. Debt mutual funds witnessed even sharper outflows, contributing to an overall net outflow of ₹66,590.70 crore from the industry during the month.
As a result, the total Assets Under Management (AUM) of the mutual fund industry slipped by 0.7%, dropping to ₹80.23 lakh crore in December from ₹80.80 lakh crore in November. These numbers reflect a broader cooling in investor participation, especially in equity-oriented schemes.
Except for a brief rebound in October 2025, equity mutual fund inflows have gradually declined over the past six months. Compared to December 2024, when equity funds saw inflows of over ₹41,000 crore, the December 2025 figure highlights a significant slowdown.
The high SIP discontinuation ratio has amplified worries, but experts suggest that the reasons behind SIP stoppages are more nuanced than simple fear of market volatility.
AMFI data indicates that the most common reason for SIP stoppage is not panic or loss of faith, but completion of the planned investment period. Many investors had started SIPs with fixed tenures of 3, 5, or 7 years. Once these periods ended, the SIPs either stopped automatically or were not renewed, pushing up the stoppage numbers.
Over the past few months, equity markets have witnessed sharp swings, moving between record highs and sudden corrections. For investors who started SIPs in the last one or two years, returns have been modest or even negative. This volatility unsettled many new investors, prompting emotionally driven decisions to pause or stop SIPs.
SIPs are designed to deliver meaningful benefits over the long term, but many investors entered the market expecting fast gains. When returns failed to meet expectations within six months or a year, disappointment set in. Influenced by social media success stories and short-term market narratives, such investors lost patience and exited prematurely.
Some investors stopped their SIPs believing that markets were overvalued and a correction was imminent. Their plan was to restart investments at lower levels. While this strategy may sound logical, market timing rarely works in practice. This tendency has contributed significantly to rising SIP discontinuations, especially among undisciplined investors.
Persistent inflation, higher EMIs, education expenses, medical costs, and job-related uncertainties have also affected household finances. In times of cash crunch, SIPs are often the first to be paused since they are viewed as investments rather than essential expenses. Additionally, some investors stopped SIPs to fund major goals like buying a house or vehicle.
Despite the alarming stoppage ratio, experts caution against interpreting the data as a loss of trust in SIPs. Monthly SIP contributions continue to remain near record highs, indicating that while some investors are exiting, new participants are steadily entering the system.
Moreover, a section of investors has shifted funds to alternative assets such as gold, silver, and other metals. In December 2025, gold ETFs recorded a massive 211% jump in inflows, reaching ₹11,646.74 crore, highlighting a temporary preference for safer or diversified assets.
The rise in SIP discontinuations reflects a natural phase in the investment cycle rather than a structural problem. Market volatility, financial pressures, and maturing SIP tenures are influencing investor behavior, but the core appeal of SIPs as a long-term wealth-building tool remains intact.
Disclaimer: This article is for informational purposes only. Investments in mutual funds are subject to market risks. Investors should consult certified financial advisors before making any investment decisions.
