'SIP sahi hai?': 20-year study shows real risk, CA warns of hard lessons ahead

A 20-year study has thrown cold water on India’s favorite investment mantra — “SIP sahi hai.” Despite record inflows, new data suggests SIPs may not be the safe, sure-win strategy they're marketed to be — especially for first-time investors chasing high returns.

Chartered Accountant Shruti Inani took to LinkedIn to voice concerns that many retail investors might share — but few articulate. “My first SIP started in 2021 with Rs 1,000. And I’ve been investing regularly since,” she wrote. “But this recent study has left me questioning my choices.”

She was referring to a long-term study by Singapore-based researcher Rajan Raju, which examined SIP (Systematic Investment Plan) performance across five NSE indices from 2005 to 2025. The findings challenge the core of India’s mutual fund marketing — that SIPs offer low-risk, long-term wealth building.

At the three-year mark, SIPs showed a 6%+ chance of incurring losses, compared to under 5% for lump-sum investments. Even over five years, SIPs carried a 2–3% shortfall risk while lump-sum investing registered zero. When SIPs do lose money, average losses hover around 10%.

Worse still, data from Kotak Institutional Equities shows that 40% of SIP money invested since 2021 has earned zero profit. Small-cap SIPs — aggressively marketed as growth engines — show a staggering 14% shortfall probability over five-year horizons, despite growing 6.5x since 2019.

Compounding the concern is a shift in the investor base. Over 35% of new SIP accounts now come from beyond India’s top 30 cities — often first-time investors lured by social media reels promising “10X in 5 years,” but lacking the financial literacy to gauge risk.

“SIPs aren’t magic,” Inani wrote. “They’re training wheels for those who’d panic sell during crashes… but they sacrifice significant returns and carry risks most don’t see.”