'Almost 0 returns after 3 years of SIPs'. Time to stop?

Summary: If it feels like your SIPs have gone nowhere, you are not alone. But pausing now will be a costly mistake. Read the story below to find out why.

Scroll through any investor forum on Reddit or social media right now and you will find the same anxiety repeating itself. "Three years of SIPs and my returns are almost zero." "My XIRR has crashed from 15 per cent to -8 per cent in a month." "I have barely seen a profit since I started."

This is one of the most common distress signals among investors who have not been in the market for long and are now facing their first significant correction. If you are in this position, this article will show you — with data — why the numbers are behaving the way they are, and why stopping now forfeits the period when the real gains begin.

Why markets can give you nothing for years and still make you rich

Equity returns do not arrive in a straight line. The BSE 500, a broad proxy for the Indian stock market, has grown at 12.7 per cent annually over the last 10 years, per BSE data. The average flexi-cap fund, benchmarked against this index, delivered 15 per annum over the same period.

The table below shows how dramatically returns varied year to year, while the long-term average held steady.

A Rs 10,000 monthly SIP in an average flexi-cap fund, started a decade ago, would have turned Rs 12 lakh of total contributions into approximately Rs 27.8 lakhs today. Markets reward staying invested through both the dips and the surges.

Why your XIRR looks terrible in the early years — and why that is normal

SIP returns are measured using XIRR, the annualised return that accounts for the timing of each instalment you put in. In the early years of an SIP, XIRR is mathematically likely to look poor, even when nothing is wrong with the fund. Data on rolling SIP returns confirms this: Think about what your portfolio actually contains after two or three years. Your most recent instalment has had weeks to grow. Your instalment from six months ago has had months to do the same. Only your earliest instalments, the smallest portion of your total investment, have had years of compounding behind them. When the market falls, there is little cushion. The XIRR turns negative quickly.

This changes as the portfolio matures. As the corpus grows larger, as money already working in the market starts to outweigh new money coming in, the portfolio gains stability. A 10 per cent market fall in year eight hits a much larger base with years of compounding already embedded in it. The same fall in year two hits a base that is almost entirely new money. The XIRR mechanism is the same; the portfolio's resilience to short-term falls is not.

The moment compounding actually accelerates

The most counter-intuitive fact about SIP investing is this: the second half of your investment journey produces significantly more wealth than the first half, from exactly the same monthly outflow. This is arithmetic, not optimism.

Consider a Rs 10,000 monthly SIP in an average flexi-cap fund. In the first four years, the corpus builds to approximately Rs 6.6 lakh. In the following four years, with the same Rs 10,000 per month, the corpus grows to over Rs 18.5 lakh. The monthly outflow is identical; the result is more than double.

The early years feel slow because mathematically they are. Most of the invested capital has had very little time to grow. The real acceleration comes when the accumulated base becomes large enough that returns on existing corpus outpace new contributions. An investor who stops before that inflection point has borne all the early-year volatility and foregone the gains it was building towards.

What a falling market actually does to your SIP

A falling market is not a threat to a continuing SIP; it is a mechanical advantage. When equity prices fall, a fixed monthly instalment buys more units of the fund at lower prices. This pulls down the average cost per unit, known as rupee cost averaging. When prices recover, gains are proportionally larger because more units were accumulated at the lower price.

Consider a simple illustration. If a fund's NAV falls from Rs 50 to Rs 40 during a downturn, a Rs 10,000 SIP instalment buys 250 units instead of 200. When the NAV recovers and moves higher, the investor who continued buying during the dip holds more units and benefits proportionally more from the recovery.

The Nifty 50's trailing price-to-earnings ratio, a standard indicator of whether the market is trading cheaply or expensively relative to corporate earnings, stood at 21 times. Independent market observers have noted this represents a meaningful correction from the elevated valuations of the prior year. For a systematic investor, a period of lower prices means each instalment is doing more work.

Should you stop your SIP? What the data suggests

Whether to continue an SIP during a market downturn depends on time horizon and investment purpose — not on a near-term XIRR reading in isolation. An investor three years into an SIP and experiencing near-zero returns is, structurally, in the same position as every investor who has ever run a long-term equity SIP was at the same stage. The behaviour of XIRR in a young portfolio under market stress is a predictable feature of the mathematics, not a verdict on the quality of the investment decision.

Investors who want to assess the long-term credentials of their specific fund — beyond recent return windows — can explore Value Research Fund Advisor, where funds are assessed on long-term parameters rather than short-term performance windows.

Frequently asked questions

Does stopping an SIP during a crash lock in my losses?

Stopping an SIP does not lock in losses on units already held — those remain invested in the fund at current NAV. However, stopping means missing the lower-cost units available during the downturn. Because rupee cost averaging works by accumulating more units at lower prices, an investor who pauses during a correction loses the mechanical advantage that recoveries then amplify. Resuming later at higher prices raises the average cost per unit and reduces the eventual gain on those missed instalments.

Is a negative XIRR always a sign of a bad fund?

A negative XIRR is not, by itself, a signal of fund quality. In the early years of an SIP — typically the first two to four years — XIRR can turn negative even when the underlying fund has strong long-term credentials, because most of the invested capital has had very little time to compound. The appropriate measure of a fund's quality is its performance relative to its benchmark and category peers over a full market cycle of five to seven years, not a short-term XIRR reading.

Does it matter whether my SIP is in a direct or regular plan?

Yes, and the difference compounds significantly over time. A regular plan includes a distributor commission, which is deducted from the fund's returns before they reach you. A direct plan has no such commission. Over a 10-year SIP, this difference in expense ratio can result in a meaningfully different final corpus.

How long does an SIP typically need to run before returns become more reliable?

Market history suggests the probability of a negative XIRR in an equity SIP decreases substantially over the long-term, as the compounding base grows large enough to absorb short-term market falls. The range of outcomes — from best-case to worst-case — also narrows with time. A longer-running SIP is not just building a larger corpus; it is becoming progressively more resilient to the same market moves that cause significant distress in the early years.

Your takeaway

Continue your SIPs. Poor returns in your early years are not a verdict but only the beginning of the story. The math is on your side; it just needs room to work.

If you need help with deciding which funds are worth putting your faith and money in, consider checking our recommendations at Value Research Fund Advisor. Our analysts go beyond recent performance and assess funds on a variety of long-term parameters. Only those that clear our rigorous analysis make it to our ‘Buy’ list.

Try Fund Advisor today

This article was originally published on April 07, 2026, and last updated on April 13, 2026.