Why investors stop SIPs during market crashes, explained by a behavioural grid

Investing advice often sounds deceptively simple: invest regularly, stay patient, avoid panic. Yet, when markets fall, many investors do precisely the opposite. Ripsy Bondia, assistant professor at IMI Delhi, explains why knowing what to do is often easier than actually doing it.

During the 2008-09 financial crisis, broader indices fell 60-65%. Equity mutual-fund flows moved from net inflows of ₹12,700 crore in January 2008 to net outflows of ₹2,100 crore in December 2009.

More recently, despite no major crash and near-zero market returns over the past two years, monthly equity mutual fund inflows fell by nearly 30%, from ₹40,600 crore in June 2024 to ₹29,000 crore in June 2026.

Understanding this behaviour requires a simple two-by-two grid. The horizontal axis measures intellectual complexity, from simple to complex. The vertical axis measures emotional difficulty, from easy to difficult.

The bottom-left quadrant contains decisions that are both intellectually simple and emotionally easy. Wearing a seatbelt or setting an alarm requires little thought and usually encounters little emotional resistance.

The bottom-right quadrant covers decisions that are intellectually complex but emotionally easy. Following a detailed recipe or analysing market trends may demand concentration. But the process can feel engaging and provide a sense of progress.

The top-right quadrant contains decisions that are both intellectually complex and emotionally difficult. Choosing a career, raising children or navigating a major life transition requires careful judgment while carrying significant emotional weight.

The top-left quadrant is especially relevant to investing. It contains decisions that are intellectually simple but emotionally difficult. Eating healthily, exercising regularly, going to bed on time and saving money all belong here. We generally know what to do but struggle to do it consistently.

The obstacle in this quadrant is not knowledge but execution. People delay or avoid these actions not because the instructions are unclear, but because following them can feel uncomfortable.

Investing through systematic investment plans (SIPs) sits squarely in this simple-but-emotionally-difficult quadrant. The principle is straightforward: invest a fixed amount every month, regardless of market conditions, and remain invested for the long term.

Following that principle during bloodbaths on Dalal Street, however, is far from easy.