In November the SIP Discontinuation ratio is at the 3rd highest. Now in November the market gone down by 10% and because of that people are playing safe and stopping their SIPs.
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But this is a problem, when the market goes down we should not stop the SIP. When the SIP runs we will get the more NAV. But people gets fearful and thus they stop their SIP. If you need the money you should start converting your equity to debt from few years back.
For example, if your goal is 10 years down the line, we should not stop the SIP because we can get more NAV and thus it will be beneficial in the future. For example, since my retirement goal is after 20 years. I am not stopping the SIP. I will continue because I can accumulate more.
Might be people were stopping their SIP so that they can do lumpsum if the market goes down further. But it can backfire like now, after going down by 10% market has recovered. So people who thought it will go down more might have lost some amount. So instead, it's not advisable to stop the SIP but what can be done is to do some lumpsum when the market goes down.
For example, if you have some debt fund which usually I keep. Then if the market goes down by 10% move the 25% debt fund to equity. If it goes down by another 10%, you can move another 25% to equity, and thus the cycle continues. And if you have got good rebound then it's upto you to book the profit for that debt fund or continue keeping it like that. That's why I always advise to keep the debt fund to leverage the market downtrend. And also.advice to not stop the SIP, like how I have not stopped in Corona.
