Understanding How To Stop Mutual Fund SIP: A systematic investment plan, also known as SIP, refers to an investment strategy in which an investor invests a pre-defined amount of money in a pre-determined mutual fund regularly at every stipulated time period in a disciplined manner.
SIP investment spans over a long period of time rather than directly investing a lump sum amount of capital. An investor has the benefit of investing in small amounts of capital. Even a small sum of a few thousand each month can result in a big difference to your corpus over the long run.
Although SIP investment can get impacted by the market and event-driven short-term risks, still this investment plan helps in rewarding investors for their patience and perseverance. SIP investment instills financial discipline and encourages to set aside a fixed sum regularly for investment needs.
However, there can be some unavoidable circumstances that can force an investor to discontinue the mutual SIP. Therefore, this article will explain how to stop mutual fund SIP. Read on to find out!
Factors Leading To Stopping SIP Investment
There can be several reasons for an investor to cancel or pause SIP investment in between the tenure. Some investors panic whenever the stock markets are correct. Hence, these investors decide to stop their SIP and sell their mutual fund holdings. However, this should be avoided.
This is because, when markets fall, the NAV of the scheme also follows. Thus, every time an investor’s money gets invested into a mutual fund scheme, he/she will be able to fetch more units at the same amount. More often than not, SIPs are advised in equity funds.
When the chosen investment scheme is not able to perform as per the expectations or it is not able to meet the returns delivered by the other schemes (of the same investment objective), then investors might rethink continuing their SIP investments.
However, it is advisable that investors should consult their financial adviser before they terminate the mutual fund scheme. Sometimes SIPs help investors in getting results in the long run.
Another reason which can make an investor reconsider his SIP investment is the change in the objective of the mutual fund scheme. Initially, that investor invested in that scheme because the investment objective of the mutual fund scheme was to help him/her in achieving the long-term financial goal.
Since the investment objective has now been changed, this may not match the financial goal of that investor. Therefore, he might decide to discontinue the SIP investment. Change in the fund manager can change the scheme’s investment style and performance.
More often than not, active investors tend to track how a particular fund is being managed and by whom. Every fund manager has his/her investment style. Therefore, the investment style of a particular fund manager might not suit the investor and he/she can think of discontinuing SIP investment.
Some sort of financial emergency can force an investor to discontinue the SIP investment. Suppose an investor doesn’t have enough money for the next SIP installment, he/she might cancel or pause their SIP.
How To Stop Mutual Fund SIP? – Know The Process
One can cancel or discontinue SIP temporarily or permanently with the help of various methods. However, the time taken to discontinue the SIP investment can vary from one fund house to another.
An investor can stop the ongoing SIP by visiting the AMC website. Firstly, the investor needs to visit the website of the mutual fund house where his/her SIP is ongoing. An investor will be asked to fill folio number, bank account details associated with the folio, and PAN.
Next, once the investor logs in, he/she needs to select an ongoing SIP for which there is a requirement to cancel. Now, click on “Cancel SIP.” SIP will be discontinued in a few days. Once the waiting period is over, SIP deductions will stop. However, investments that have been made till the date of cancellation will remain in the fund until a redemption or switch request is raised.
An investor can choose to cancel a SIP investment through the agent also. Investors need to contact the concerned agent through whom they have initiated the investment process. Next, they have to fill in the required form for the cancellation/stop request. This form will ask for all the required details of the investor and SIP. Finally, a cancellation request will be sent to the AMC by the agent.
Investors can also choose to cancel their SIP investment through an online distributor platform. If an investor decides to go for SIP through an online distributor platform, they are required to log in to the distributor’s mutual fund website. Next, an investor should select the SIP instruction that is required to be stopped. Finally, click on “Cancel/Stop” SIP.
The above article explains how to stop mutual fund SIP through various routes. However, cancellation or discontinuation of SIP investment should be taken after careful consideration as this can impact the returns over the long term. It is very important to plan investments to get a sense of how these investments can achieve desired results.
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