A Systematic Investment Plan or SIPs is often seen as the ultimate hack for building wealth. Set it, forget it, and let compounding work its magic, this is what most of us think.
Unfortunately, that belief is not always true.
Most of us have met many people – friends, colleagues, even people at workplace – who swear by SIPs. They proudly state how their SIPs are running every month and how good it feels to be financially responsible – the money gets deducted automatically. It feels like we are doing something smart.
And we are not alone. According to AMFI data as of June 2025, more than ₹25,000 crore flows into SIPs every month. India has over 8 crore active SIP accounts. The culture picked up after the 2017 campaign “Mutual Funds Sahi Hai,” attracting many young investors. For most first-timers, SIP became the go-to route into investing.
And honestly, SIPs do bring discipline. They reduce the temptation to time the market. They allow people to start with small amounts. Especially for people in their 20s and 30s, it’s better to invest something than nothing.
But here is the hard hitting financial fact – SIPs Alone Don’t Create Wealth
Here’s where things go wrong. People assume SIPs will always create wealth. That is a misconception.
To illustrate the same let us take an easy example –
Manish had been doing SIPs in two mutual funds for nearly three years. Looking at his portfolio, one fund stood out but for the wrong reasons. It was consistently underperforming. It lagged behind its benchmark, its category average, and even a basic index fund.
He was shocked. He thought SIPs would automatically ensure good results. But they don’t. SIP is just the method. What you invest in matters more. If the mutual fund itself is poor, SIP won’t save you. It’s like pouring water into a leaking bucket. The system works only if the bucket is intact.
So now come the question – How to Handle SIPs That Aren’t Working
If your SIP isn’t performing as expected, don’t panic. And don’t ignore it either. Here’s a step-by-step way to approach it:
- Start With Context, Not Emotion
Review the fund’s 3 to 5-year performance. Don’t judge based on a single number.
Compare it to: Its benchmark index, Other funds in the same category, broad index like the Nifty 50 or Sensex
If your fund is delivering 7% but peers are doing 12-13%, it’s time to ask why. Long-term underperformance is a red flag.
- Understand What You Own
Know the fund type. Is it a diversified equity fund or a thematic one?
For example, sector-specific funds (like PSU or infra) may do well briefly, then stay flat for years. From 2018 to 2020, many PSU funds gave almost zero returns. A plain index fund outperformed them.
If you are in a theme-based fund, ask yourself whether the theme still has room to grow.
- Go Beyond Returns
Look into recent changes: Has the fund manager changed? Has the investment style shifted? Is there a big surge in new investors?
These can all affect future performance. A quick annual check is usually enough.
- Ask Yourself: Would I Pick This Fund Today?
If you were investing fresh, would you still choose this fund? If the answer is no, don’t continue just for the sake of it. SIPs should align with your goals, not just your habits.
And finally don’t hesitate to ask for help. If you’re unsure about fund evaluation, speak to a financial advisor. They can help you see whether underperformance is temporary or structural. You are already committing your money. Committing a bit of thought is the least you can do.
SIP Is Like That Health-Conscious Friend…
You know the one: walks 10,000 steps, eats healthy, sleeps on time. But if they start following random diet advice, their discipline won’t help much.
Same with SIPs. The habit is good, but the content matters more. Check what your SIP is buying. Reassess once a year.
Can SIPs Help You Retire With Rs 1 Lakh a Month?
Now let us answer the most asked question but by taking a real -life retirement example.
Meet Mrs. Veena Singh. She’s 60, a retired administrator who raised her son single-handedly. Now she wants to enjoy a simple life: some travel, filter coffee in the morning, and peace of mind. She estimates she’ll need ₹1 lakh/month for the next 30 years.
But in fact – how much does she need?
Answer: ₹2.78 crore
Why so much? Because inflation eats away your money silently.
The Assumptions:
Rs 1 lakh monthly expense today, Inflation at 6% annually, Investment returns (post-tax) at 8%, with a 50-50 split in equity and debt. To make this work for 30 years without running out of money, she needs ₹2.78 crore on Day 1 of retirement.
What if she thought ₹1 crore was enough?
A lot of people make this mistake. But by Year 10, her expenses grow to ₹21.5 lakh annually. By Year 30, they touch ₹68.5 lakh.
Hence, Is ₹2.78 crore Enough?
Only if: There are no unexpected medical costs, she doesn’t need home renovations, she doesn’t need to support family financially
To be safe, she should aim for ₹3 crore. That gives her:
Rs 1.1 lakh/month withdrawal capacity
A Rs 10,000 monthly cushion for emergencies
Even a Small Buffer Helps
If she invests that extra ₹10,000/month at just 5% return, it can grow to ₹15.5 lakh in 10 years—a useful emergency fund.
But here is where it gets tough – what If she has only ₹1.5 Crore?
The plan fails after about 18 years.
She’d have to cut expenses drastically or take higher investment risks, which is dangerous at her age.
So what is the lesson here?
Retirement isn’t just about a lump sum. It’s about making that lump sum last.
Investing through SIPs can help you get there, but only if you: Choose the right funds, review periodically, plan with realistic assumptions.
Final Thought
SIP is a great system. But it needs quality fuel to run well. Don’t let automation make you passive. Check your funds. Think about your goals. Adjust when needed. SIP Is a Tool, Not a Guarantee
Because the path to wealth and a peaceful retirement isn’t just about discipline. It’s about direction