Why Your SIP Is Not Giving Expected Returns
Disappointed with your SIP returns? Discover 8 common reasons why your SIP is not giving expected returns. expert strategies to maximize your mutual fund returns in 2026.
You have been diligently investing through SIPs for years now. Every month, like clockwork, money gets deducted from your account. You have followed all the advice start early, invest regularly, stay invested. The experts promised that compounding would work its magic.
But when you actually look at your portfolio, something feels off. The returns aren’t what you expected. Maybe they are not bad, but they are certainly not exciting either. You start wondering if SIPs are really worth it or if you have been sold a dream.
Here’s the truth. Systematic Investment Plans are genuinely powerful wealth-building tools. The problem usually isn’t the SIP itself it’s how we approach it. After working with hundreds of investors over the years, I have noticed certain patterns that consistently hold people back from achieving better returns.
Let me walk you through the most common culprits behind disappointing SIP performance and, more importantly, what you can actually do about them.
1. Unrealistic Return Expectations
This is where most disappointment begins. We have all heard those stories someone’s cousin doubled their money in three years, or a colleague made 25% returns last year. These stories create expectations that the stock market simply cannot meet consistently.
The reality check you need. equity markets don’t work on a straight line. They never have, and they never will.
Think about it this way. If you started your SIP in early 2020, you probably watched your portfolio nosedive during the COVID crash. Terrifying, right? But if you stayed invested, you also enjoyed the spectacular recovery that followed. Then came 2022, when markets corrected again. And now, in 2025, we are seeing another cycle play out.
This is normal market behavior. Over the long term, Indian equity markets have historically delivered returns in the range of 10% to 12% annually. Some years give you 30%, others might give you negative returns. But expecting 20% returns every single year? That’s setting yourself up for disappointment.
The biggest mistake people make is checking their SIP returns after just one or two years. That’s like planting a mango tree and expecting fruit the next season. Equity investing needs patience real patience, not the kind we claim to have.
What you should do instead. Measure your SIP performance over meaningful timeframes. Give it at least seven to ten years before making judgments. Look at rolling returns, not point-to-point returns. And remember, the goal isn’t to beat the market every year. it’s to stay in the market long enough for compounding to actually work.
2. Wrong Fund Selection
Here’s a scenario I see repeatedly. Someone notices that ABC Small Cap Fund delivered 45% returns last year. They immediately start a SIP in it, expecting similar returns going forward. Fast forward two years, and they are sitting with mediocre or even negative returns, wondering what went wrong.
Chasing past performance is probably the most expensive mistake in mutual fund investing.
Another common issue. Over-diversification without actual diversification. I have seen portfolios with eight different large-cap funds. Sure, there are eight funds, but they all hold pretty much the same stocks. That’s not diversification. that’s duplication.
Then there’s the mismatch problem. Conservative investors putting 80% of their money in small-cap funds because they heard small caps give higher returns. Or someone saving for their child’s education five years away, investing entirely in aggressive hybrid funds that might not deliver when needed.
Your fund selection should be boring and strategic, not exciting and random.
What you should do instead. Choose funds based on your specific goals and risk appetite, not based on recent performance charts. If you are investing for retirement 20 years away, you can afford more equity exposure. If you need the money in five years for your daughter’s wedding, you need stability more than growth.
Look at consistency over multiple market cycles. How did the fund perform in 2018? What about during the 2020 crash? A fund that delivered steady 12% returns over ten years is far better than one that gave 30% one year and -10% the next.
And please, limit your funds. You don’t need more than four to six well-chosen funds for a complete portfolio.
3. Lack of Portfolio Review
I completely understand why this happens. You set up your SIPs, automate them, and then life gets busy. The beauty of SIPs is supposed to be their “set it and forget it” nature, right?
Wrong. SIPs automate your investing, not your financial planning.
Markets change. Fund managers change. Your own life circumstances change. That fund which was performing brilliantly five years ago might have been struggling for the past two years. That large-cap fund might now have 40% of your portfolio instead of the 30% you planned, just because it grew faster than your other holdings.
I have met investors who haven’t reviewed their portfolios in five years. They are surprised when I show them that two of their funds have consistently underperformed their benchmarks. They are paying management fees for below-average performance.
What you should do instead. Mark your calendar for an annual portfolio review. It doesn’t have to be complicated. Just check these three things:
First, is each fund beating its benchmark over a three-year period. If not, there should be a good reason why you are still holding it.
Second, has your asset allocation drifted significantly. If your original plan was 70% equity and 30% debt, but it’s now 85-15, you need to rebalance.
Third, do these funds still align with your current goals and risk profile. Maybe you were 30 and aggressive when you started. Now you are 40 with two kids and a home loan. Your portfolio should reflect that change.
4. Stopping SIPs During Market Corrections
This one hurts to watch because it’s so counterintuitive yet so common.
March 2020 happens. Markets crash 30%. Panic sets in. Many investors either pause their SIPs or stop them altogether, thinking they’ll resume “when things settle down.” Markets recover by October. These investors start their SIPs again in January 2021, after markets have already rallied.
What just happened? They stopped buying when units were cheap and resumed buying when units became expensive. This is exactly the opposite of what you should do.
The whole point of SIPs is rupee cost averaging. When markets fall, your fixed monthly investment buys more units. When markets rise, it buys fewer units. Over time, this averages out your purchase price beautifully. But this only works if you keep investing through all market conditions.
I get it watching your portfolio value drop is uncomfortable. It feels wrong to keep investing when everything is red. But market corrections aren’t disasters. they are discount sales. You are literally getting the same assets at a lower price.
What you should do instead. Commit to continuing your SIPs regardless of market conditions. Better yet, if you have extra money during a correction, increase your SIP amount temporarily. I know this sounds scary, but the math is undeniable. Some of the best long-term returns come from units purchased during market downturns.
5. SIP Amount Is Too Low for Your Goals
Sometimes there’s nothing wrong with your SIP strategy at all. The returns are fine. The funds are performing well. The problem is simply that you are not investing enough money to reach your goals.
I’ll give you a real example. Someone wants to accumulate one crore rupees in 15 years. They are investing ₹5,000 per month, assuming 12% returns. That sounds reasonable, right? Except the math doesn’t work. At 12% annual returns, ₹5,000 monthly SIP for 15 years gives you approximately ₹25 lakhs, not one crore.
Another common issue. life changes, but SIP amounts don’t. You started with ₹3,000 per month eight years ago when you were earning ₹40,000. Today you are earning ₹1.2 lakhs, but the SIP is still ₹3,000. Meanwhile, the cost of your goals whether it’s your child’s education or your retirement has increased significantly due to inflation.
What you should do instead. Recalculate your SIP requirements every few years based on current costs and realistic return expectations. Use a good SIP calculator, but be conservative with return assumptions.
Implement a step-up strategy. Increase your SIP amount by at least 10% every year. Many fund houses now offer automatic step-up SIPs that increase your investment annually without you having to remember.
Whenever you get a salary hike, bonus, or windfall, allocate a portion to increasing your SIPs. If you got a 15% raise, increase your SIP by at least 10%. You’ll barely notice the difference in your monthly budget, but your future self will thank you.
6. Too Many SIPs, No Clear Strategy
More isn’t always better. Having ten different SIPs doesn’t make you more diversified it often just makes you more confused.
I have reviewed portfolios where people have nine equity funds, and upon closer inspection, seven of them hold similar stocks. They own Reliance, HDFC Bank, and Infosys through seven different funds. That’s not strategy. that’s chaos.
This usually happens when you take advice from multiple sources. Your friend recommends one fund. Your colleague swears by another. You read an article about a third. Before you know it, you are running ten SIPs with no clear idea which one serves which purpose.
The result? Average returns across the board and zero clarity on whether you are on track for your goals.
What you should do instead. Build a goal-based portfolio structure. Assign each SIP to a specific goal with a specific timeline.
For your daughter’s college education in ten years, you might have one or two equity funds. For your retirement in 25 years, you might have different, more aggressive funds. For your car purchase in five years, maybe a balanced advantage fund.
This clarity helps you track progress meaningfully and make better decisions about each investment. Quality always beats quantity in mutual fund investing.
7. High Expense Ratios Eating Into Returns
Expense ratios seem tiny—1.5%, 2%, maybe 2.5%. What difference can such small percentages make?
A massive difference, actually. Over long investment periods, even small expense differences compound into significant amounts.
Let me break this down with an example. Suppose you invest ₹10,000 monthly for 20 years. Fund A charges 2% expense ratio, Fund B charges 0.8%. Both deliver 12% gross returns before expenses. After 20 years, Fund A gives you approximately ₹96 lakhs while Fund B gives you ₹1.08 crores. That’s a difference of ₹12 lakhs just because of the expense ratio.
Many investors still use regular plans through distributors without realizing they are paying significantly higher expense ratios than direct plans. Sometimes this extra cost is worth it if you are getting valuable advice. Often, it’s not.
What you should do instead. Switch to direct plans if you are comfortable managing your investments or if you are working with a fee based advisor. The savings add up substantially over time.
That said, don’t obsess over finding the cheapest funds. A fund charging 1.2% but consistently outperforming its benchmark is better than one charging 0.6% and delivering mediocre returns. Balance cost with quality.
8. Ignoring Asset Allocation
Here’s something most investors discover the hard way. fund selection matters far less than asset allocation in determining your long-term returns.
Many people focus entirely on picking the best equity funds while ignoring the fundamental question. how much should be in equity versus debt in the first place.
If you are 25 and investing for retirement, being 100% in equity might make perfect sense. But if you are 50 with limited risk appetite and major expenses coming up, being 90% in equity is asking for trouble. Not because equity is bad, but because volatility at the wrong time can force poor decisions.
I have seen aggressive portfolios cause emotional distress during corrections, leading investors to exit at exactly the wrong time. I have also seen conservative portfolios fail to beat inflation, leaving investors short of their goals despite years of disciplined investing.
What you should do instead. Decide on an appropriate asset allocation based on your age, goals, income stability, and risk capacity. A rough rule of thumb. your equity allocation could be 100 minus your age (though this isn’t a rigid rule).
If you are 35, maybe aim for 65% equity and 35% debt. If you are 50, perhaps 50-50 makes more sense. Adjust based on your specific circumstances.
Rebalance annually. If equity has grown and now forms 80% of your portfolio instead of the planned 65%, book some profits and move them to debt. This simple discipline of buying low and selling high happens automatically through rebalancing.
Final Thoughts: SIPs Work, But Only With Discipline and Strategy
After years of advising investors, here’s what I know for certain. SIPs are not magic bullets that automatically create wealth. They are tools—powerful tools, but tools nonetheless. And like any tool, they work best when used correctly.
Your SIP returns depend less on market timing and more on investor behavior. The difference between successful and unsuccessful SIP investors isn’t intelligence or luck it’s discipline, realistic expectations, and strategic thinking.
If your SIP portfolio isn’t delivering the returns you expected, resist the urge to abandon the approach entirely. Instead, diagnose the specific issue. Are your expectations unrealistic? Have you chosen the wrong funds? Are you investing enough? Is your asset allocation appropriate?
Fix the underlying problem, and you’ll likely see your returns improve significantly over time. The beautiful thing about SIPs is that course corrections work. You don’t need to get everything perfect from day one. You just need to stay invested, stay rational, and stay focused on your goals.
Done right, with proper planning and periodic reviews, SIPs remain one of the most reliable wealth-building strategies available to Indian investors. The question isn’t whether SIPs work—it’s whether you are willing to work your SIP strategy properly.
Start there, and the returns will follow.