The biggest risk isn’t the market. It’s your behaviour

Right from the start of my career as a personal finance journalist, I’ve pushed one idea to anyone willing to listen: invest in mutual funds through systematic investment plans (SIPs).

Last year, I finally convinced a friend—fresh off a run of successful stock picks—to start one. My pitch was simple: use mutual funds to build a diversified portfolio alongside direct equities.

What I didn’t anticipate was how quickly global events would test that conviction. A war led by the US rattled markets, sentiment turned, and many first-time investors found themselves staring at losses. My friend’s portfolio is no exception. But his reaction is.

Whether it’s stocks he has held for a decade or his PPF contributions, he believes in the power of compounding. There’s no panic—just some light-hearted complaints about my timing. Markets will turn. So will his portfolio.

That kind of temperament, however, isn’t universal. Many investors who entered during the post-Covid rally are now seeing their first drawdown. And the response, in many cases, has been predictable: stop SIPs.

The data backs this up. The SIP stoppage ratio crossed 100% in March, hitting 101%, meaning more SIPs were discontinued than started. Some of this reflects churn, with investors switching funds. But it’s still a sharp break from the 60-70% range seen in recent years, when inflows comfortably outpaced closures.

The impulse is understandable, but misguided.

In the early years of an SIP, returns often look underwhelming because most of the money hasn’t had time to compound. If markets fall during this phase, the impact feels sharper. Over time, that changes. A larger corpus compounds, cushioning volatility. An 8% drop early on stings; the same decline later is absorbed by years of accumulated gains.

That’s the point: SIPs are a long-term strategy. As Jash Kriplani explains in this story, when markets feel most unsettling is often when discipline matters most.

But market volatility is only one part of today’s uncertainty.

AI-driven job disruption, a weakening rupee and inflation worries are beginning to weigh on household finances. These concerns are no longer abstract—they’re showing up in everyday conversations.

This is when mistakes tend to creep in. Panic can lead to poor decisions. So can inaction.

To cut through the noise, Mint Money spoke to experts and asked five key questions:

What risks should households prepare for this year?

How should you tweak your portfolio now?

How much emergency cash is enough—does the six-month rule still hold?

What should you do about loans?

What mistakes are investors most vulnerable to today?

And for newer investors:

If your portfolio is in the red, what should you do?

The answers converged on a simple idea: the biggest risk isn’t the environment—it’s behaviour.

What matters is how you respond. Build an emergency fund. Stick to your asset allocation. Keep debt under control.

Debt, of course, is a double-edged sword.

Most consumer loans—used to boost spending—are best avoided. But home loans are an exception. They are long-term, often floating-rate loans linked to benchmarks such as the repo rate.

That linkage matters. When rates fall, your loan cost should too. But the transmission isn’t uniform.

RBI data shows that scheduled commercial banks passed on about 87 basis points of the 125 bps rate cut over the past year. NBFCs, in contrast, passed on only around 12 basis points as of February 2026.

As Ananya Grover explains in this story, slower transmission by NBFCs means borrowers need to stay alert. Early in your loan tenure, even a 50–75 basis point reduction can translate into meaningful savings—making a case for renegotiating or switching lenders.

There’s a softer, but equally important, money lesson this season.

With summer holidays here, many parents are signing up children for camps and activities. As Ann Jacob writes, these can double as early lessons in financial literacy. A simple approach—budgeting for activities—can help children understand value, trade-offs and spending decisions.

These lessons stick, especially when reinforced through everyday conversations at home.

And finally, a bit of travel inspiration.

Shipra Singh speaks to a Bengaluru couple who managed a 12-day trip to South Korea for under ₹3 lakh. Seeking a mix of culture, coastal experiences and local immersion, they planned a route across Seoul, Busan and Gyeongju—without overspending.

It’s a reminder that even in uncertain times, experiences don’t have to be extravagant to be meaningful.

That’s all for this week. Until next time.