My SIP is down 12% after 1 year. Here's what nobody told me

Summary: SIPs reduce timing risk. They don't reduce market risk. They certainly don't reduce geopolitical risk. A first-time investor learned all three distinctions the hard way so you don't have to.

"Your portfolio is down 12 per cent."

I stared at the notification on my phone, convinced it was a glitch. I'd been running SIPs for over a year. A complete year of disciplined, responsible investing. I'd read all the articles about rupee cost averaging and how SIP is the only sure-shot way to "get rich". I'd nodded along to podcasts explaining how SIPs "reduce risk" and "smooth out volatility."

Nowhere did anyone mention I could actually lose money, least of all because of a war I was watching on the news.

I opened the app. There it was, in red: Rs 1.2 lakh invested, current value Rs 1.12 lakh. A loss of Rs 8,000, which showed up as an XIRR of about -12 per cent over one year.

I called my friend Stuti, a long-term investor. "I thought SIPs were supposed to be safe," I said, trying to keep the panic out of my voice.

"Safe?" she repeated. "Who told you that?"

"Everyone. Every article. Every expert. They all say SIPs reduce risk."

"They reduce risk," Stuti said carefully. "They don't eliminate it. And they certainly can't shield you from a war breaking out. When did you start investing?"

"January 2025."

There was a pause. "Ah. Yeah, that explains it."

The part SIP charts leave out

Stuti explained what I'd missed in all those optimistic articles: SIPs don't guarantee positive returns. They just protect you from terrible timing on a single lumpsum investment.

"Think about it," she said. "You started your SIPs in early 2025 when markets near their all-time highs. Then came the Iran-US escalation. Crude oil spiked. Foreign institutional investors pulled money out of emerging markets, India included. The Nifty fell. Your early investments bought units at relatively high prices, and even though you've been buying cheaper units since, your average cost is still higher than the current market value."

She was right. The geopolitical shock had done what domestic fundamentals alone might not have: spooked global capital and sent indices tumbling. My SIP had been catching falling knives for months, and the war had sharpened those knives considerably.

"But I've been doing rupee cost averaging," I protested. "Isn't that supposed to fix this?"

"Rupee cost averaging helps you buy more units when prices are low," Stuti explained patiently. "But if the market stays below your average purchase price, whether because of earnings disappointments or a war driving oil to $120 a barrel, you're still in the red. It's math, not magic."

I felt like I'd been sold a lie. Every SIP advertisement showed neat upward-sloping graphs. Nobody mentioned that a conflict in the Middle East could slope that graph sharply downward.

What actually happens in a SIP

Stuti sent me a simple example to illustrate:

Let's say you invest Rs 10,000 monthly in a mutual fund with these unit prices over six months:

• Month 1: Rs 100 per unit (you buy 100 units)
• Month 2: Rs 90 per unit (you buy around 111 units)
• Month 3: Rs 80 per unit (you buy 125 units)
• Month 4: Rs 75 per unit (you buy around 133 units)
• Month 5: Rs 70 per unit (you buy around 143 units)
• Month 6: Rs 85 per unit (you buy around 118 units)

Total invested: Rs 60,000. Total units bought: 730 units. Current value at Rs 85 per unit: Rs 62,045.

You're up Rs 2,045. But notice what happened: the price is lower than when you started (Rs 85 vs Rs 100), yet you're profitable because your average cost is around Rs 83.3 per unit.

"Now imagine the current price is Rs 75, which is exactly the kind of level markets can reach when a war breaks out, and nobody knows how long it will last," Stuti said. "You'd have 745 units worth Rs 55,875. You've invested Rs 60,000, and you're down Rs 4,125. That's a negative return, even with perfect rupee cost averaging."

It clicked. SIPs help by lowering your average cost when markets fall. But if the market stays low, held down by oil prices and global risk aversion, you're still underwater.

The question nobody wants to ask

"So when does it actually work?" I asked Stuti.

"Time," she said simply. "Equity markets are volatile in the short term, and geopolitical crises make them more volatile still. But wars end. Oil prices stabilise. Over seven, 10, 15 years, markets tend to absorb these shocks and trend upward. SIPs work because they keep you invested through the chaos. The people who lose money are the ones who stop when they see red, usually right after a crisis headline."

I thought about that. My one-year horizon suddenly felt dangerously short.

"What should I do now?" I asked. "I'm down 12 per cent. Should I stop and wait for the war to resolve?"

"That's the worst thing you can do," Stuti said firmly. "You're buying units cheaper now than when you started. If you stop, you're locking in losses and missing the recovery. The moment tension de-escalates, and it always does, eventually, markets tend to bounce back sharply. You want to be invested when that happens, not sitting on the sidelines."

What I'm doing now

I didn't stop my SIPs. It wasn't easy. Every month, I'd see that Rs 10,000 leave my account while news channels debated oil supply routes. Every headline felt like a reason to pause.

I extended my timeline instead. Instead of thinking "one year," I started thinking "a decade." I stopped checking my portfolio every time a new development broke in the news. I automated everything and treated it like a recurring bill, not a position I needed to manage around geopolitical events.

The truth about SIPs

Here's what I wish someone had told me upfront: Yes, SIPs can give negative returns. If you start investing and a war breaks out six months later, driving markets down and keeping them there, you will be in the red when you check.

SIPs are not "safe" in the sense that they guarantee profits. They're "safer" than trying to time the market with a lump sum. They reduce timing risk, not market risk. And they certainly don't reduce geopolitical risk.

Equity is volatile. Crises are unpredictable. SIPs smooth that volatility over time, but they don't make you immune to it.

The real advantage of SIPs isn't that they can't lose money. It's that they keep you disciplined when you're losing money, and that discipline is what eventually leads to gains, war or no war.

If you're starting a SIP today, in this environment, understand this: the next few months might show negative returns. Global uncertainty is high. Markets may fall further before they recover. That's not failure. That's just equity being equity in a volatile world.

The failure is stopping when you see red because that's exactly when your SIP is doing its best work, buying cheap.

Stay invested. Extend your timeline. And remember, the only way a SIP truly fails is if you quit.

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This article was originally published on January 28, 2026, and last updated on April 03, 2026.