Unpacking SIP Leak: Why 75% of India's New Mutual Fund Investors Quit Early

India's booming SIP inflows may be hiding a troubling truth: while money pours in at record levels, most investors are pulling out just as fast.

In October 2025, India hit a milestone Rs29,529 crore in monthly Systematic Investment Plan (SIP) inflows-a moment many hailed as a victory for retail investing. But transaction banker Pranav K. warns that the country's mutual fund engine is leaking badly.

According to recent AMFI data, the SIP stoppage ratio has surged to 75%. Of roughly 60 lakh new SIP accounts opened in October, nearly 45 lakh were paused or discontinued. "We are pouring water into the bucket at record speed but the hole at the bottom is getting bigger," Pranav wrote on LinkedIn.

He attributes the spike in exits to three major behavioral shifts.

First, fintech convenience has backfired. While digital platforms have made investing frictionless, they've also made quitting dangerously easy. "Impulsive decisions are now just a UI tap away," he said, noting that many SIPs are abandoned within two years.

Second, market volatility has tested investor resolve. Data from mid-2025 shows that SIP exits spike precisely when markets dip. "Investors are buying high and stopping low-locking in losses instead of averaging them out," Pranav noted.

Third, investors are chasing returns like traders, not long-term wealth builders. "Jumping from last year's top-performing small-cap to this year's hot sector fund" often leads to missing both rallies and catching only the downside.

India may be becoming a nation of savers, but not yet of true investors. "Wealth isn't created by the Rs5,000 you invest in a bull market," he said. "It's created by the Rs5,000 you didn't withdraw when the portfolio was down 15%."