EN
Periodic investing is one of the most effective approaches to investing towards a long-term financial goal. It helps you break down your investments over a prolonged period, gradually and consistently. SIPs are of the options that allow you to invest in a periodic manner.
The advantages of investing with SIPs are numerous. However, there may be instances when you need to stop SIP for various reasons. Let's delve deeper into how to stop a mutual fund SIP.
Key Takeaways
-
Stopping SIP discontinuities compounding, which slows the natural rate of portfolio growth through time.
-
AMCs allow SIP pauses, but gaps longer than three months may lead to mandate cancellation. However, the 3-month period varies across AMCs; some allow longer pauses, while others may allow shorter ones.
-
Investors can pause or cancel SIPs through AMCs, distributors, or offline forms with minimal friction.
-
Repeated pauses often push investors into behavioural mistakes, increasing the chance of mistimed entries and exits.
Understanding Systematic Investment Plan (SIP)?
In the case of SIP, the concept is simple: you can put in a fixed amount of money in mutual funds at a regular time period rather than investing a lump sum. This structured method spreads out market timing risk and benefits from rupee-cost averaging.
Another key aspect of understanding SIP is the built-in flexibility—investors can increase, decrease, or pause contributions based on cash flow. Whether you're planning long-term goals or building early financial discipline, SIPs create a steady, predictable path toward wealth creation without overwhelming your budget.
Check Out Our SIP Calculator
How to Stop Mutual Fund SIP Temporarily?
KYC Registration Agencies (KRAs) Website
In India, KYC Registration Agencies play a vital role in financial processes, with five prominent entities: CAMS KRA, Karvy KRA, NSDL KRA, NSE KRA, and CVL KRA. The technique for cancelling a Systematic Investment Plan is largely similar across various platforms. To initiate SIP cancellation through CAMS KRA:
-
Access the website by logging in with your user ID and password.
-
Navigate to 'My Transactions' in the top menu.
-
Choose 'Systematic Transactions' and then opt for 'Active.'
-
Select the specific active fund for SIP cancellation and click 'Cancel.'
If the cancel option is absent, it indicates either the asset management company's restriction on online cancellations or the SIP's origination outside the agency. In case of the latter, you need to manually download the cancellation form from the company's website and follow the offline cancellation process.
5 Reasons Why Investors Pause or Stop SIP Midway
1. Financial emergencies
Unexpected financial emergencies like job loss or medical expenses are one of the reasons to stop SIP. During such situations, an investor might have to redirect their funds towards other priorities.
2. Market volatility
During moments of market volatility, investors may pause or cancel their SIP. They may choose to wait for a more favourable investment environment or until they have a clear future direction in the market.
3. Shift in financial goals
Financial goals or investment strategy may change, necessitating the pause or cancellation of the SIP.
4. Shortage of funds
When faced with a temporary cash crunch or a liquidity issue, investors may have to stop SIP.
5. Underperformance of funds
The unsatisfactory performance of funds is another reason why investors may choose to pause or cancel their SIP and switch to a different fund.Do keep in mind that cancelling or pausing a SIP may affect your total returns and long-term financial goals. That’s why it should always be done after careful consideration and analysis of the situation.
Also Read, What is SIP Investment?
Negative Impacts of Temporarily Stopping Your SIP
-
You lose out on the benefits of compounding when you stop a SIP. The basic concept of compounding is to generate returns on the principal amount and the accumulated returns over a period of time. That’s why the benefit of compounding maximises when you invest regularly. Whenever you stop investing, you actually hinder the potential growth of your investment.
-
A SIP is a disciplined way of investing, and stopping it may lead to a loss of discipline. Without the automatic investment feature, you may be less likely to invest regularly, and this may have an impact on your long-term financial goals.
-
When you stop your SIP, you may be tempted to time the market and invest when the market is low. However, timing the market is a risky strategy as it requires accurate predictions of market movements, which can be difficult to do.
-
Unless you start afresh with a new investment, you may not be able to achieve your financial goals.
How to Stop SIP Online?
There are multiple ways using which you can cancel or temporarily stop your mutual fund SIP online. Here’s how to stop SIP online:
AMC website:
-
Visit the mutual fund website where the SIP is still active and log in using your credentials.
-
Select the ongoing SIP that you wish to cancel and click on “Cancel SIP”.
-
The SIP will be discontinued within 21 working days.
Agent:
If you have purchased a SIP through an agent, notify them. The agent will then submit a cancellation request with the appropriate AMC.
Online Distributor Platform:
If you have chosen a SIP through an online distributor platform, then you can access the mutual fund website of the distributor or agent. Just select the SIP instruction that needs to be terminated and then click on "Cancel/Stop" SIP.
Conclusion
Understanding how to stop SIP or pause a SIP helps you manage your mutual fund investments without derailing long-term goals. SIPs work best when continued consistently, but it is important to know how to discontinue them responsibly to ensure flexibility in the event of financial stress. Always consider the effect on compounding, the timing of goals, and future investment discipline before out-stopping contributions. Staying committed to a plan - while making informed adjustments when necessary - helps to foster robust wealth development over the years.
