A systematic investment plan, commonly known as SIP, is an investment option offered by mutual funds to assist investors in making strategic choices to build a corpus to achieve financial goals. An investor can make fixed investments in the mutual fund scheme of their preference at regular intervals using the SIP option.
The fixed amount of money may be as little as Rs. 500 and the investment can be made weekly, monthly, quarterly, semi-annually, or yearly. By making a time-bound investment through SIP, the investor may avoid worrying about market fluctuations and typically benefits from average costs and the long-term compounding effect.
But there may be times when you might want to cancel or temporarily stop your SIP. It can be done through online as well as offline methods.
How to stop SIP through online mode?
Step 1: Visit the mutual fund website using the login credentials associated with your ongoing SIP. You'll find it easier to log in if you have your PAN, bank account number linked to your folio, and the folio's number ready.
Step 2: Next, choose the SIP that is currently running and click "Cancel SIP."
Step 3: Within 30 days of making this request, your SIP will be terminated.
You would need to terminate the SIP through the mutual fund portal account if you created an online SIP with the help of an online agent.
How to stop SIP through offline mode?
Step 1: The first step for investors is to notify the AMC of their wish to discontinue the ongoing SIP. Investors must also notify the bank where they have set up the SIP auto-debits.
Step 2: After starting the procedure, investors must submit the Appointment Form to the AMC or the RTA (Registrar and Transfer Agents) of mutual funds.
Step 3: Depending on the fund house, processing of the SIP cancellation request may take up to 21 days.
Step 4: To terminate the SIP, the investor must send a formal request to the bank, which is known as the NACH mandate.
Step 5: The SIP will be cancelled by the AMC after the ‘Stop SIP’ order is issued to the bank and no money has been deducted from the account for two months.
Investors may consider stopping SIPs if they don't have enough money to pay their regular needs. However, most experts suggest pausing SIPs rather than discontinuing them when investors run out of money.
How to temporarily stop your SIPs?
Step 1: The website of the AMC where the investor created their SIP investment must be used to access the investor account.
Step 2: Next, look through the SIP transactions to discover details about all of the SIPs that are still in effect with the fund company.
Step 3: If investors select the ‘SIP Pause’ option, SIPs can typically be suspended for a minimum of one month and a maximum of six months. Some AMCs enable you to pause SIPs for up to three months.
Investors, particularly those who are risk-averse, frequently leave the market due to volatility. Additionally, underwhelming performance of a fund is a significant reason that leads to cancellation of SIPs.
As an investor, you should be aware that if you decide to discontinue your SIP in the midst of your plan period, the AMC is not permitted to apply any penalties or additional fees.