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Temper Expectations, Focus on Discipline

Indian investors may need to temper expectations of smooth, linear returns from systematic investment plans (SIPs) and equity markets, with discipline, affordability and the ability to remain invested during downturns emerging as key determinants of long-term outcomes, according to a latest report by DSP Mutual Fund.

The report said that investors often extrapolate past market performance into the future while overlooking risks that remain invisible during periods when markets are performing well. “The hidden risk is that you can’t choose the time you were born or the type of environment in which you will invest,” DSP said in the report, adding that investors can instead choose diversification and the price they pay.

Rethinking SIP Return Calculations

DSP’s analysis also challenges the conventional presentation of SIP returns. A Rs 10,000 monthly SIP over the past 20 years would have grown to Rs 87.3 lakh on the Nifty 50 TRI, based on the report’s calculations. However, adjusting the SIP for the investor’s income would have resulted in a much lower terminal corpus of Rs 31.9 lakh, highlighting the importance of affordability when assessing historical SIP outcomes.

The Perils of Interrupting Investments

The report also flags the impact of interruptions to long-term investing. SIP stoppages and withdrawals are particularly damaging when they occur during market downturns, when job uncertainty and urgent cash requirements may force investors to reduce investments or withdraw capital. DSP said investors ultimately need “luck, discipline and affordability” for SIP investing to work as expected.

Long-Term SIPs Still Outperform Despite Volatility

At the same time, DSP’s study of 10-year SIPs in the Sensex TRI over the past three decades found that 99 per cent generated returns higher than debt, with a median return of 14.2 per cent. However, 81 per cent of those SIPs experienced negative returns at some point during their journey and 95 per cent encountered a rough patch within the first five years.

Warning Against Chasing Recent Winners

The report also cautions against chasing recent winners. In the case of silver ETFs, the average investor earned only 18 per cent over the past year compared with a 98 per cent return delivered by silver, while 56 per cent of money invested during the period was sitting at a loss as of July 31, 2026. DSP’s broader message is that long-term investing is less about predicting every market move and more about surviving volatility, maintaining discipline and avoiding behavioural mistakes that can undermine compounding. (ANI)