Systematic Investment Plans (SIPs) have long been a preferred investment tool for retail investors seeking disciplined wealth creation. However, the latest data suggests growing concerns among investors, as January 2025 recorded the highest-ever SIP stoppage ratio of 109% ,indicating a sharp increase in the number of discontinued SIPs compared to new registrations.
Rising SIP Stoppage Ratio: A Cause for Concern
The SIP stoppage ratio, which represents the percentage of SIPs discontinued relative to new registrations, has seen a worrying trend over the past year. While the ratio hovered between 51% and 61% for most of 2024, it surged to 79% in November, 83% in December, and 109% in January 2025, marking an unprecedented rise.
Key Data Trends
| Date | Outstanding SIP Accounts (in crore) | SIP Stoppage Ratio (%) | SIP AUM (₹ trillion) |
|---|---|---|---|
| Apr 2024 | 8.7 | 52 | 11.3 |
| May 2024 | 8.76 | 88 | 11.5 |
| Jun 2024 | 8.99 | 59 | 12.4 |
| Jul 2024 | 9.34 | 51 | 13.1 |
| Aug 2024 | 9.61 | 57 | 13.4 |
| Sep 2024 | 9.87 | 61 | 13.8 |
| Oct 2024 | 10.12 | 61 | 13.3 |
| Nov 2024 | 10.23 | 79 | 13.5 |
| Dec 2024 | 10.32 | 83 | 13.6 |
| Jan 2025 | 10.27 | 109 | 13.2 |
Possible Reasons Behind the Rising SIP Stoppage Ratio
- Market Volatility: Uncertain economic conditions, global market fluctuations, and domestic economic challenges may have prompted investors to withdraw their SIPs.
- Profit Booking: Investors who had accumulated substantial gains over the past few years may be exiting their SIPs to book profits.
- Liquidity Crunch: Rising inflation, high interest rates, and increased household expenses might have led to financial strain, causing investors to pause or stop their investments.
- Shift in Investment Preferences: Investors may be reallocating funds to fixed-income instruments, direct equity, or alternative asset classes due to changing risk appetites.
- Psychological Impact: A higher stoppage ratio could also reflect investor panic, as many retail investors tend to exit markets during corrections rather than staying invested for the long term.
Impact on SIP AUM and Future Outlook
Despite the increasing stoppage ratio, the overall SIP assets under management (AUM) remain significant at ₹13.2 trillion in January 2025. However, the decline from ₹13.6 trillion in December 2024 suggests a slowdown in fresh inflows.
Disclaimer
The information provided in this article is for informational and educational purposes only. While we strive for accuracy, financial data such as SIP stoppage ratios, AUM figures, and market trends may change over time. Investors are advised to verify details with official sources such as AMFI, mutual fund houses, or financial advisors before making investment decisions.
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