mutual fund investment
Systematic Investment Plan or SIP in mutual funds has long been considered the safest and disciplined way to create wealth. It is easy for common people to invest a little money every month, but now recent figures indicate that the confidence of investors is wavering to some extent and a large number of people are closing their SIPs or withdrawing money midway.
To understand this trend, it is important to first look at the current situation of the mutual fund industry. According to AMFI data for December 2025, the pace of investment in equity mutual funds has slowed down. Net investment in equity funds declined to about Rs 28 thousand crore in December, which is less than in November. At the same time, withdrawal of money from debt funds increased further, the effect of which was visible on the entire mutual fund sector.
Money is flowing out of the industry, AUM is also affected
If we look at both equity and debt together, a huge amount of money came out of the mutual fund industry in December. Due to this, the total asset under management i.e. AUM of the industry also decreased. This is a clear indication that investors have become more cautious at the moment and are avoiding taking risks.
What is the biggest reason for SIP closure?
It is often believed that people are stopping SIP due to fear of falling market, but the truth is a little different. According to AMFI, many SIPs were closed because their stipulated period was completed. Many investors had started SIP for 3, 5 or 7 years and after the time was over, they did not decide to continue further. Due to automatic closure of SIP, the figures have suddenly started appearing higher.
- Market ups and downs increased uneasiness- In the last few months, the stock market has sometimes gone through a period of boom and sometimes a sharp decline. This fluctuation especially troubled new investors. People who had recently started SIP did not get the returns as expected. At some places there was less profit and at other places there was loss, due to which he got scared and stopped the SIP.
- Expecting quick profits became the biggest mistake- The real benefit of SIP comes in the long run, but many investors consider it a means of short-term earning. Influenced by social media and get-rich-quick stories, disappointment increased when returns were not seen within a few months. Due to lack of patience, such investors are closing SIP the most.
- The temptation to time the market- Some investors felt that the market was at a very high level, so it would be better to stop SIP now and start again when the decline occurs. This strategy sounds good, but in reality it is very difficult to time the market correctly. This thinking often becomes the cause of loss.
- Rising inflation and household expenditure- Inflation, EMI, children’s education, treatment and job uncertainty have also affected SIP. When pressure on the household budget increases, the first thing people do is stop investment. SIP is not considered an expense, hence it is stopped as soon as the need arises. Many people are stopping SIP even for big expenses like buying a house or car. The reason for closure of SIP is not just fear, but the combined effect of planning, understanding and financial pressure. It is important that investors consider SIP as a long-term habit and not a way to make quick profits. With the right knowledge and patience, SIP even today can become the foundation of a strong future.
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