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First-time investor path · Lesson 7 of 7 · 7 min

Behaviour: crashes, drawdowns and staying in

The plan survives contact with the market only if you do. Recovery maths explains why stopping during a fall is the most expensive decision a new investor makes.

Recovery is asymmetric

Losses and gains are not mirror images. If your ₹100 falls 20%, you hold ₹80 — and 80 must grow 25% to return to 100. The deeper the cut, the more violent the required rebound: 50% down needs 100% up. This asymmetry is why 'buy and hold' is not laziness but arithmetic.

Now the behaviour twist: a falling market is the best time to keep a SIP running. At an 80 NAV your ₹5,000 buys 62.5 units instead of 50. Every unit bought cheap lowers your average cost. The investor who stops the SIP at the bottom converts a paper drawdown into a permanently worse average entry.

So the checklist for your first 30% fall — and there will be one — is short: nothing in your life changed, the goal date hasn't moved, the fund's category and cost are unchanged; therefore the correct action is the boring one. Continue the SIP, don't check the app daily, and rebalance on your annual review date, not on a red day.

The 20% fall, two ways

Assumptions: your ₹1,00,000 fund investment falls 20%; separately, your ₹5,000 SIP runs through a NAV fall from ₹100 to ₹80.

  1. Lumpsum after the fall

    ₹1,00,000 × 0.80 = ₹80,000

  2. Gain needed back to even

    ₹20,000 ÷ ₹80,000 = 25% (not 20%)

  3. SIP units at NAV ₹100

    ₹5,000 ÷ 100 = 50 units

  4. SIP units at NAV ₹80

    ₹5,000 ÷ 80 = 62.5 units — 25% more units per instalment

The fall demands a 25% rebound to undo — while simultaneously making every continuing SIP instalment 25% cheaper. Stopping the SIP abandons the discount precisely when it's widest.

Feel the asymmetry

Set the fall and see the gain required to get back to even — and how deep cuts scale.

Gain needed to get back to even

25%

Share of your money left after the fall

80%

₹100 journey
₹100₹80₹100BeforeAfter the fallTo recover
Recovery maths is asymmetric: deeper cuts need outsized gains — a 50% fall demands a 100% gain. Staying invested through the fall is what makes the recovery possible.

Recovery maths is asymmetric: deeper cuts need outsized gains — a 50% fall demands a 100% gain. Staying invested through the fall is what makes the recovery possible.

Figures are labelled assumptions for teaching, not forecasts — see the sources note at the end of this lesson.

Misconception check

The index is down 18% this year. Your friend pauses his SIP 'until things stabilise.' What is he actually doing?

The index is down 18% this year. Your friend pauses his SIP 'until things stabilise.' What is he actually doing?

Ends in a tool

Model continuing through the fall

Run the SIP calculator with a lower assumed return for a few years — see why continuing through a lean stretch barely dents a 20-year outcome.

Model continuing through the fall

Where the numbers come from

  • Assumption: ₹100 → ₹80 NAV fall (illustrative)
  • Drawdown arithmetic (20% fall → 25% recovery) is exact by definition

No live prices or NAVs are used anywhere in this path. Lesson 7 of 7, First-time investor path.

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Educational, not advisory: LetsInvest is a research publication, not a SEBI-registered investment adviser. Every figure in this lesson is either named to an official source or labelled an assumption — no live prices or NAVs.

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How we research. Every fee on this site carries a source and a verification date. Data is re-checked against official broker pages; read our editorial methodology. LetsInvest is a research publication, not a financial adviser — see our terms.

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