No, you should not pause SIPs during market crashes unless facing a genuine financial emergency like job loss or urgent medical needs. Continuing lets rupee cost averaging buy more units at lower NAVs, accelerating recovery gains and compounding. Pausing misses this and often leads to re-entry at higher prices.
Why Continuing Wins:
Crashes are temporary, markets recover (e.g. post-2008, 2020), rewarding disciplined investors with lower average costs. Data shows SIPs started at peaks outperform paused ones by 10-20% over 10 years due to extra time invested. It is evident from history that stopping disrupts discipline, compounding and your multi-year goals.
When Pausing Makes Sense:
- Income disruption requiring liquidity.
- High-interest debt payoff.
- Inadequate emergency fund (aim 6-12 months expenses first).
Action Steps:
- Automate SIPs to bypass emotion.
- Consider stepping up (10%) during dips if cashflow allows.
- Review allocation yearly, not reactively.