What to Do When the Market Crashes: SIP Investor’s Handbook

When markets fall, panic often rises faster than prices drop.

Every headline screams red, every app shows losses, and every investor wonders, should I stop my SIPs?

It’s a question that has tested even the most disciplined investors.

Let’s rewind to March 2020. The world was in lockdown, the Nifty had fallen nearly 40%, and fear was contagious. For many SIP investors, years of steady growth vanished within weeks. But a year later, those who stayed invested saw their portfolios bounce back and often grow beyond pre-crash levels.

So what changed? Nothing magical. Just behaviour.

History Repeats, So Do Recoveries

Every crash feels unique when you’re living through it. But market history tells a calmer story.

2008 (Global Financial Crisis): The Nifty 50 fell over 50%, only to double in the next two years.

2013 (Taper Tantrum): A sharp dip followed by a rebound within months.

2020 (Covid Crash): One of the fastest collapses ever and one of the fastest recoveries.

Each time, the pattern was the same: panic → fall → disbelief → recovery → record highs.

Those who stopped investing locked in losses. Those who continued reaped the rewards of discipline.

The Real Crash Happens in the Mind

When your SIP shows negative returns, it’s not the numbers that hurt, it’s the fear of loss.

Behavioural economists call this loss aversion: the pain of losing ₹1 feels twice as strong as the joy of gaining it.

That’s why investors are tempted to pause SIPs during corrections, it feels safer. But in reality, that’s when SIPs quietly do their best work.

When markets fall, your SIP buys more units at lower prices. When they rise again, you own more of the growth. It’s systematic, emotion-proof investing if you let it work long enough.

What to Do When Markets Fall

When the screens turn red, the best action is often inaction.

Before reacting, ask three questions:

• Have my long-term goals changed?
• Is my emergency fund in place?
• Is my asset allocation still balanced?

If your goals are 5–10 years away, a temporary dip doesn’t change your plan. Market volatility is a feature, not a bug, of wealth creation.

That said, a market crash is a great time to review, not react.

Rebalancing: Turning Chaos into Opportunity

Falling markets change the weight of your portfolio. Equity may shrink, debt may rise in proportion.

This is where rebalancing helps.

By shifting a portion from debt back to equity, you restore your original allocation and buy assets at lower prices. It’s not timing the market; it’s simply following discipline.

Similarly, if you have surplus cash, a Systematic Transfer Plan (STP) into equity funds during a correction can enhance long-term returns while managing risk.

Crashes aren’t invitations to gamble, they’re quiet openings to strengthen your plan.

The Regret You’ll Always Feel Later

Every recovery brings a familiar feeling, “I wish I had invested more back then.”

It happens every single time.

When markets fall, fear takes over. When they rise again, regret follows.

But here’s the truth: no one can catch the exact bottom. What matters is not perfect timing, but consistent participation. If you simply stayed the course, kept your SIPs running, rebalanced when needed, you were already doing what most people wish they had done later.

Crashes don’t come with announcements, and neither do recoveries. By the time confidence returns, the best buying days are already gone.

So the next time you see red on your screen, remember that’s often the moment your future self will look back on and say, “I wish I had invested then.”

The Do’s and Don’ts

Do:

• Continue your SIPs.
• Revisit your goals and risk profile.
• Keep your emergency fund separate and liquid.

Don’t:

• Check your portfolio daily.
• Redeem out of fear.
• Make new investments purely out of FOMO or greed.

Remember, SIPs are meant to make volatility your ally — not your enemy.

The Calm After the Storm

Every market correction feels endless when you’re inside it. But look back: every fall so far has eventually led to a higher peak.

The real winners are not those who time the market, but those who spend time in the market.

So when the next crash comes, and it will, remind yourself:

You don’t control the market.

You control your behaviour.

The PrimeWealth Perspective

At PrimeWealth, we’ve seen investors through bull runs and market crashes alike and one truth stands out: discipline beats emotion, every single time.

A good financial advisor doesn’t just build your portfolio; they help you stay invested when it’s hardest to do so. We handhold you through volatility, bring perspective when panic sets in, and remind you of the bigger picture, your long-term goals.

Because markets will move up and down.

Our job is to ensure you keep moving forward.