Why Discipline Wins the War Against Market Volatility

Abraham Cherian
Dec 27, 2025
4 min read

For decades, your life has been defined by discipline, strategy, and the ability to stay calm under pressure. Whether in a counter-insurgency grid or a high-altitude post, you understood that panic is the enemy and adherence to the plan saves lives.

As you hang up your uniform and transition to civilian life, you face a new kind of volatility—financial markets. The "fog of war" here isn't smoke and dust; it's the daily fluctuation of the Sensex and Nifty. And just like in operations, the natural instinct when under fire (or when markets crash) is to take cover. In financial terms, this often means stopping your Systematic Investment Plans (SIPs) or withdrawing funds to "safety."

However, veteran financial strategists know that retreating during a market correction is a strategic error. This post explains why maintaining your position—staying disciplined with your SIPs—is the most effective way to secure your financial perimeter.

The Strategic Landscape: Inflation vs. Safety

Most SS officers exit in their mid to late 30s, and PMR officers in their mid 40s. You have a long "second innings"—likely 30 to 40 years. While your pension offers a safety net, it may not fully keep pace with lifestyle inflation, especially if you have goals like children's higher education, marriage, or settling in a Tier-1 city.

Many veterans rely heavily on the DSOP Fund (Defence Services Officers Provident Fund), money back insurance policies or FDs while in service. While these are excellent for capital protection, they are debt instruments. In the long run, their post-tax returns barely beat inflation. To generate real wealth that grows faster than the cost of living, you need equity exposure. This is where SIPs in mutual funds come in.

But equities are volatile. They go up, and terrifyingly, they go down.

The Concept: Volatility is Not Risk; It’s Opportunity

In the military, you differentiate between a "hazard" and a "risk." In investing, volatility (price fluctuation) is often mistaken for risk (permanent loss of capital).

When the market falls, the news headlines scream "Crash!" and "Billions Wiped Out." Your instinct might be to pause your SIP to "stop the bleeding." But if you understand the concept of Rupee Cost Averaging, you will see that a market dip is actually a supply drop of ammunition—it lets you stock up at a discount.

Understanding Rupee Cost Averaging (RCA)

Rupee Cost Averaging is the financial equivalent of a "force multiplier." It allows you to buy more units of a mutual fund when prices are low and fewer when prices are high, automatically lowering your average cost of acquisition over time.

Let’s look at a simple scenario to see how this works. Imagine you invest ₹10,000 every month.

Month	Market Condition	NAV (Price per Unit)	Units Purchased (₹10k / NAV)
January	Normal	₹20	500
February	Market Correction (Dip)	₹16	625
March	Market Crash (Panic)	₹10	1,000
April	Recovery	₹18	555
May	Normal	₹22	454
Total			3,134 Units

The Result:

Total Invested: ₹50,000
Average NAV Price: ₹17.2 (Simple average of prices)
Your Average Cost: ₹15.95 (Total Invested / Total Units)

Because you stayed disciplined and kept buying when the market was "crashing" in March, you bought a massive 1,000 units at ₹10. This pulled your average cost down to ₹15.95. If you had stopped your SIP in March out of fear, your average cost would be significantly higher, and you would own fewer units when the market recovered in May.

Key Takeaway: You cannot control the wind (market direction), but you can adjust the sails (accumulate units). Lower prices are not a threat; they are a sale.

The "Behavioral Gap": Why Intelligence Doesn't Equal Returns

You are trained leaders, yet data shows that retired officers often underperform the market. Why? Because of the Behavioral Gap—the difference between the investment's return and the investor's return.

When markets fall, the "safety-first" mindset kicks in. You might think, "Let me pause the SIP now, and I'll restart when the market stabilizes."

Here is the flaw in that tactic:

You miss the bottom: "Stable" usually means prices have already gone back up. By waiting for clarity, you miss the recovery rally.
You break the compounding chain: Albert Einstein reputedly called compounding the "eighth wonder of the world." Interrupting your contributions disrupts this geometric progression.

Authentic data from AMFI (Association of Mutual Funds in India) repeatedly shows that investors who continued their SIPs during the 2008 financial crisis or the 2020 COVID crash generated significantly higher returns over the next 5 years compared to those who paused.

Battle Drills for Financial Discipline

To apply your military discipline to your portfolio, follow these Standard Operating Procedures (SOPs):

Automate the Process: Just as you don't debate orders every morning, don't debate your investment every month. Set a perpetual SIP date (e.g., the 5th of every month) and let the bank automate the transfer.
Ignore the "Noise": Financial news channels are designed to trigger anxiety because anxiety keeps you watching. Treat daily market news like "rumor intelligence" (RUMINT)—unverified and often irrelevant to your long-term mission.
Review Strategy, Not Tactics: Review your portfolio once a year (Strategic Review) with a SEBI-registered investment advisor. Do not review it every time the market drops 500 points (Tactical Reaction).
Diversify Your Arsenal: Ensure your portfolio has the right mix of Large Cap (stable), Mid Cap (growth), and Debt (safety). This asset allocation is your armor against volatility.

Stay the Course

In the armed forces, you learned that courage isn't the absence of fear, but the ability to act in spite of it. Financial markets will test your nerve. There will be months when your portfolio value drops, and it will feel uncomfortable.

But remember the objective: Long-term wealth creation for a secure retirement.

The market has survived wars, pandemics, and recessions, and it has always trended upward in the long run. By stopping your SIP, you turn a temporary decline into a permanent loss. By continuing, you turn volatility into an ally.

Disclaimer: This content is for informational purposes only and does not constitute financial or tax advice. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.