SIP guide

Your SIP Shows 0% Return After 2 Years? Here’s Why That’s Good News

Is your SIP stuck at 0% return? Learn how units and NAV work through a simple story with real numbers, why this is the best buying phase, and how to check if your fund is right.

The calculator for this guide SIP Calculator Enter your own figures, see the projection, and save it as a PDF. With sign-in. Open the calculator →

The moment most investors give up

You've invested every single month for two years. You open your statement expecting some growth, and the return column says 0%. Twenty-four instalments, and nothing to show for it.

This is exactly the point where many investors stop their SIP. It feels like the money is stuck.

But here's what the statement doesn't show you clearly: while your returns were flat, your units were quietly piling up at low prices. And units are what eventually create wealth.

First, what is a unit?

When you invest in a mutual fund, you're not really buying "rupees of returns". You're buying units. The price of one unit is called the NAV (Net Asset Value).

Think of it like buying gold every month with a fixed budget of ₹10,000:

• When gold is expensive, your ₹10,000 buys a small quantity.
• When gold becomes cheaper, the same ₹10,000 buys more.

A SIP works the same way. When the NAV falls, your fixed instalment automatically buys more units.

The value you see in your statement is simply: total units × today's NAV. So when the market is down, the value looks weak, even though the number of units you own keeps growing.

A tale of two friends: Amit and Vikram

Amit and Vikram, two friends from Surat, started a ₹10,000 monthly SIP in the same fund on the same day. The NAV was ₹100.

The first year was rough. The market kept sliding, and by month 12 the NAV had dropped to ₹60. They had each put in ₹1,20,000, but their statements showed only about ₹92,000.

Vikram panicked. "I'm losing money every month," he said, and stopped his SIP. He kept the units he already had, but invested nothing more.

Amit was worried too, but before deciding anything he called the mutual fund distributor who managed his investments. The advice he got was simple: "Don't count rupees right now. Count units." Amit kept his SIP running.

The second year brought only a mild recovery. By month 24, the NAV had climbed to just ₹71.5, still well below where they started. Amit had invested ₹2,40,000 and his portfolio was worth about ₹2,39,900. Practically 0% return.

Vikram couldn't resist: "Two years of discipline, and you're still at zero!" What he didn't see was the one thing Amit had gained that no return column shows.

Inside Amit's portfolio: the numbers

Over 24 months, Amit collected 3,355 units. Had the NAV stayed at ₹100 throughout, the same ₹2,40,000 would have bought only 2,400 units. The falling market gave him roughly 955 extra units.

100.0Month 1NAV ₹100

122.2Month 6NAV ₹81.8

166.7Month 12NAV ₹60

152.1Month 18NAV ₹65.8

139.9Month 24NAV ₹71.5

Notice when Amit bought the most units: in month 12, when things looked worst, his ₹10,000 bought 166.7 units instead of 100. The very moment Vikram walked away was the best buying opportunity of the entire journey.

These figures are an illustration to explain the concept and do not represent any specific fund.

Year three: the payoff

In the third year the market recovered, and by month 36 the NAV was back at ₹100. Not a boom, just a return to where it all began.

The NAV only came back to its starting point, yet Amit earned roughly 19% a year. That return came entirely from the cheap units he kept buying while his statement showed zero.

Those "0% years" were not wasted. They were the accumulation phase. Returns tend to show up all at once, when the market recovers.

But one condition matters: the fund must be right

Amit's story works only because he was in a good fund. A flat return can have two very different causes: a weak market or a weak fund. Patience pays in the first case. In the second, patience just costs you time.

Some investors end up in funds that may not deliver good returns even in the future. Common warning signs:

• Other funds in the same category are doing well, but yours has lagged them for years.
• You bought a theme or sector fund because it was trending, and that trend has faded.
• The fund doesn't match your goal or timeline, such as a small-cap fund for money you need in two years.
• You hold several funds of the same type, so your portfolio has little real diversification.

In such cases, continuing the SIP will still add units, but there's no assurance those units will grow in value. Accumulating more units of the wrong fund is not an advantage.

What to do: get a portfolio review

Don't decide whether to stop or continue your SIP based on emotion. Decide based on a review. Have your complete portfolio checked by a qualified, registered professional. A good review looks at:

1. How your fund has performed against its category peers and its benchmark.
2. Whether the fund suits your goals, time horizon and risk tolerance.
3. Whether there's too much overlap between your funds.
4. Which SIPs to continue and which to switch, along with any tax or exit load involved.

In short: the right fund + patience = Amit's result. The wrong fund + patience = lost time.

Your SIP is at 0%. What now?

Do:

• Look at your unit count, not just the return figure. If units are rising, your SIP is doing its job.
• Consider increasing your SIP amount if you can. Lower prices mean more units for every rupee.
• Check whether the problem is the market or the fund. If the whole market is down, there's little to worry about.

Don't:

• Don't stop your SIP in a falling market out of fear. Remember Vikram.
• Don't judge an equity fund on one or two years of returns. Give equity at least 5 to 7 years.

The bottom line

A 0% return on your SIP isn't failure. It's the buying season. Count units, not rupees. When the market turns, those units become your returns.

Frequently asked questions

Mutual fund investments are subject to market risks. Read all scheme-related documents carefully. The figures above are for illustration only; past performance does not guarantee future results.