The Growing Trend of Direct Market Investing
In recent years, direct-to-market investing has experienced a significant surge in India. Over 1 crore new mutual fund and direct investors have entered the market, highlighting a noticeable shift toward self-managed investments. However, this trend is not without its challenges—approximately 20% of these investors exited the market within just five months, primarily due to market volatility.
Why Are Investors Quitting So Soon?
The current market phase has been lackluster, with a 15% decline triggering panic among new investors. Many individuals who entered the market with hopes of quick gains are now reconsidering their decisions, especially those who did not seek advice from financial advisors or fully understand the principles of long-term investing.
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Penny Wise, Pound Foolish?
As pointed out by Kirtan Shah and others on X, many investors are opting to forgo professional assistance in order to save on expense ratios—sometimes as little as 0.5% to 1%. However, this attempt to reduce costs can result in missed market opportunities or poor investment decisions. A minor upfront saving can lead to substantial losses in the long run.
The Rise in SIP Stoppage Ratios
A key indicator of investor behavior is the SIP (Systematic Investment Plan) stoppage ratio, which compares the number of SIPs stopped to the number started (see the image above). From 2023 to 2025, this ratio has surged, particularly among direct investors, reaching 102%. This figure indicates that more SIPs are being halted than initiated in the direct route. In contrast, SIPs managed by Independent Financial Advisors (IFAs) show a much healthier stoppage ratio of only 57%.
The Value of Professional Guidance in Investing
People consult doctors, lawyers, or architects when addressing health, legal, or construction matters. Yet, when it comes to financial markets, many believe they can manage on their own. Unfortunately, the absence of financial planning or professional advice often leads to premature exits and a loss of confidence in capital investments.
Are you focusing on the long term, or just trying to save 1%? Share your thoughts in the comments below. If this article prompted you to reflect, please SHARE it with friends and fellow investors.
