You’ve probably heard the advice: invest regularly, stay patient, don’t panic during market falls. It is simple and straightforward.
Yet when markets fall, many investors do the opposite. Consider the 2008-09 global financial crisis when broader indices fell by 60-65%. Equity mutual fund monthly flows swung from net inflows of ₹12,700 crore in January 2008 to net outflows of ₹2,100 crore in December 2009. Today, despite no major crash and markets delivering near-zero returns over the past two years, monthly equity mutual fund inflows have fallen nearly 30%, from ₹40,600 crore in June 2024 to ₹29,000 crore in June 2026.
Why does this happen? Consider a simple two-by-two grid. The horizontal axis represents intellectual complexity, from simple to complex. The vertical axis represents emotional difficulty, from easy to difficult.
The bottom-left corner contains decisions that are intellectually simple and emotionally easy. Things like wearing a seatbelt or setting an alarm. They require little thought and face no emotional resistance. At the other extreme, the top-right corner includes decisions that are intellectually complex and emotionally difficult—choosing a career, raising children, or navigating a major life transition.
The bottom-right quadrant contains intellectually complex but emotionally easy decisions, such as following a detailed recipe or tracking market trends. Despite their complexity, they feel engaging and give us a sense of progress. And the top-left corner, the most interesting one, which contains decisions that are technically simple but emotionally difficult: eating healthy, exercising regularly, going to bed on time, and saving money. None of these is intellectually complex. We all know what we should do, yet often fail to do it consistently. This is where most of our struggles lie. The problem is not knowledge but execution. We delay or avoid actions not because they are unclear, but because they are emotionally uncomfortable.
Now consider this quadrant through the lens of investing. Take one of the most widely recommended strategies for retail investors: investing regularly through SIPs. The idea is simple: invest a fixed amount every month, regardless of market conditions, and stay invested for the long term. It is a technically simple decision. But is it emotionally easy?
Consider a market downturn. During the 2008 global financial crisis, the Sensex nosedived about 60% in less than 10 months! An investor who put ₹10 lakh into an index fund at the peak would have seen its value shrink to about ₹4 lakh. Similarly, during the covid crash, the Sensex witnessed a near 40% decline in just two months. As an investor, you don’t just see your portfolio fall; you see and feel fear. You see colleagues, friends, and conversations in WhatsApp groups hit the panic button, making it seem that selling is the only way to avoid losing everything. News headlines, ‘expert’ commentaries, and app notifications amplify uncertainty with questions such as "Is the worst yet to come?", "Should investors stay in cash?", and "How long will the market downturn last?" Investors wonder if buying now is an act of prudence or recklessness. They also begin analyzing their circumstances: ‘What if I lose my job?’, ‘What if someone in my family falls sick?’, ‘What if markets remain down when I need money?’
In such situations, the technically simple advice to ‘Stay invested’ becomes emotionally difficult to follow. It requires you to brace for volatility and uncertainty. It requires you to stand apart from the crowd. It requires you to accept that the decision to stay invested may look wrong for months before it proves right. That is why buying low is so difficult. Such moments rarely feel like opportunities. They feel like a crisis. Only in hindsight do they appear as extraordinary buying opportunities.
This is the central tension in investing: the actions that matter most—continuing SIPs or investing during downturns—are simple but emotionally difficult. The next time you review your investments, place your decisions on this grid. Ask yourself: Am I avoiding something because it is emotionally difficult? That clarity is powerful. Because in investing—as in life—the biggest gains rarely come from mastering complexity, but from doing a few simple things consistently.
Ripsy Bondia is an assistant professor at IMI Delhi
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