Should You Pause SIP During Job Loss?

Introduction

Losing a job can create financial anxiety. One of the first thoughts that strike investors is — “Should I pause my SIPs?” While it may seem like a quick relief, the long-term consequences of stopping your SIPs during market lows can be costly.

In this post, we explore how to make smart SIP decisions during tough times, with a real-life example of Arjun and Suma, who faced a similar crossroad.

23/06/2025

What Happens When You Pause SIPs?

SIP (Systematic Investment Plan) works best when markets are volatile — which often coincides with economic stress (like job loss).

Stopping SIP = Missing market lows
Missing market lows = Lower long-term gains
Continuing SIP = Rupee cost averaging benefit
Pausing SIP briefly is okay, but restarting soon is critical

Before you pause, evaluate:

Emergency fund availability
Family financial needs
Duration of unemployment
Nature of your SIPs (essential goals vs optional investments)

Real-Life Example: Arjun vs Suma Both lost their jobs in April 2020.

Arjun paused all SIPs in equity and hybrid funds, fearing outflows.
Suma paused only her luxury goal SIP (foreign trip), but continued her education and retirement SIPs using her emergency fund.

By 2024:

Arjun’s equity fund CAGR = 5.2%
Suma’s equity fund CAGR = 11.6%

Key Takeaways

SIP Crisis Management Insights

Insight	Explanation
Prioritize goal-based SIPs	Don't pause critical ones (retirement, child education)
Use emergency funds smartly	That's what they're for — to avoid breaking long-term investments
Pause luxury-oriented SIPs	These are okay to delay temporarily
Resume SIPs ASAP post-recovery	The longer you wait, the more gains you lose

Conclusion

Pausing SIPs may offer temporary relief but can hurt long-term compounding. Be selective — not reactive. If you have an emergency fund, lean on it and stay invested in key goals. Don’t let short-term loss cause long-term regret.

Lost a job? Make a financial priority list. Pause optional SIPs, protect core goals, and lean on your emergency fund. Resume SIPs as soon as you can — the future you will thank you.

Summary Table: SIPs During Job Loss

Investor Action During Crisis Analysis

Investor Action	Avg. Return (3-5 Yr CAGR)	Avg. Risk (Volatility)	Avg. Investor Behaviour
Continued essential SIPs	10% - 12%	Medium	Goal-focused, disciplined
Paused all SIPs	4% - 6%	Low	Fear-based, weak recovery
Selective SIP pausing	8% - 10%	Medium-Low	Balanced, uses emergency fund wisely

Dr. Satish Vadapalli
Research Analyst

Should You Pause SIP During Job Loss?

What Happens When You Pause SIPs?

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