Systematic Investment Plan or SIP had gained popularity among common investors in the last several years. But recently it is being seen that people’s disillusionment towards SIP is increasing. Many investors are now reducing regular investments in this instrument and some are even stopping it altogether. Experts say that there are many serious economic and psychological reasons behind this.

1. Market volatility

The biggest reason is the volatility of the stock market and equity funds. In the last few months, returns in many big funds have not been as per expectations. When investors consistently see flat or negative returns, it is natural for them to lose confidence.

2. Economic pressure and expenses

Due to inflation and increase in household expenditure, people have less money left for savings. Many investors are saving their SIP amount and using it at the time of need.

3. Not getting expected returns

Some investors expect high returns in the long term when starting SIP. But people’s confidence wavered when real life returns were lower than expected.

4. Lack of information and understanding

Many investors do not fully understand the functioning of SIP and mutual funds. Lack of knowledge about fund performance, market risk and terms increases frustration.

5. Lean towards other investment options

In today’s digital age, investors have many options such as crypto, stocks, gold or digital bonds. Many investors think that these options are more attractive and flexible than SIP.

Expert advice

Financial experts say that continuous investment in SIP is a means of profit in the long term, but investors have to pay attention to right fund selection and risk management. In the opinion of experts, regular and disciplined investments can give good returns in the long run even during market volatility.

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