Systematic Investment Plans (SIPs) have become the preferred investment method for millions of Indians, especially young earners looking for a simple and disciplined way to build wealth. However, financial experts caution that depending solely on SIPs may limit long-term returns and jeopardise major financial goals.
The warning comes even as SIP participation has touched historic levels. AMFI’s October 2025 data shows monthly SIP contributions surged to ₹29,529.37 crore — the highest ever for the second consecutive month and 16.6% higher than last year. India now has 9.45 crore active SIP accounts, with assets under SIPs rising to ₹16.25 lakh crore, making up more than 20% of the mutual fund industry’s total assets.
With SIPs becoming the backbone of Indian household investing, experts say investors must avoid treating them like guaranteed-return products.
The Risk of Treating SIPs as Assured Returns
According to Sameer Mathur, MD and Founder of Roinet Solution, many investors mistakenly assume SIPs always deliver positive returns because they have seen consistent gains in recent years.
“SIPs are tax-efficient and convenient, but they are not risk-free. When markets are unfavourable, returns fall. Investors must remember SIPs do not guarantee returns,” Mathur said.
Why Long-Term Goals May Fail With SIP-Only Investing
Mathur explained that a SIP-only strategy often leads to insufficient corpus build-up for long-term goals such as home buying or higher education.
Because SIPs accumulate wealth slowly, investors often end up realising too late that contributions are too low. He recommends combining SIPs with timely lump-sum investments — such as bonuses or incentives — to boost compounding.
Sequence-of-Returns Risk: The Hidden Threat Near the Goal Date
Experts warn that market volatility can severely impact investors nearing their target date.
Mathur advised that equity-linked SIP investments should gradually shift to safer debt mutual funds as the goal approaches to protect accumulated gains from sudden market declines.
SIP-Only Portfolios Can Reduce Returns by 13–40%
Mathur highlighted that SIP contributions made later in the tenure have less time to compound, reducing total returns compared to a combined SIP + lump-sum approach.
He recommends annual SIP step-ups along with targeted lump-sum additions to maximise wealth creation.
Avoid These Common SIP Mistakes
Many retail investors slip into these repeated errors:
Starting SIPs without assessing risk appetite
Selecting random monthly amounts instead of goal-based planning
Copying others’ portfolios
Investing only through SIPs instead of diversifying across asset classes
Experts emphasise that SIPs are highly effective, but only when paired with proper financial planning, diversification and periodic lump-sum investing.
India’s SIP culture is stronger than ever and indicates rising financial awareness. However, experts stress that SIPs are a method — not a guarantee. To maximise long-term wealth, investors should follow a balanced approach combining SIPs, timely lump-sum investments, diversification and regular goal reviews.
