What is Perpetual SIP?

6 mins read
by Angel One
Know what Perpetual SIP means, how it works, and its advantages for long-term investors. Learn why a Perpetual SIP can help you achieve financial goals effortlessly.

Imagine setting up an investment plan that keeps growing your wealth without an expiry date—no need to renew, no interruptions, just seamless investing. Sounds convenient, right? That’s exactly what a Perpetual SIP offers.

Many Indian investors set up Systematic Investment Plans (SIPs) to invest in mutual funds regularly. But when filling in the details, they often come across the option of a perpetual SIP and wonder what it means. Does it mean you’re locked in forever? Can you stop it anytime?

What is a SIP?

A SIP is a method of investing in mutual funds where an investor contributes a fixed amount at regular intervals—weekly, monthly, or quarterly. SIPs help investors build wealth over time, take advantage of rupee cost averaging, and instill financial discipline.

Perpetual SIP Meaning

A Perpetual SIP is a SIP with no end date. When setting up a SIP, the investor has the option to specify a start date and an end date. If the end date is left blank or is set to a very distant future date (such as 2099), the SIP is considered perpetual.

This means that the investments will continue indefinitely until the investor manually stops the SIP. Unlike a regular SIP, where the contributions stop after a fixed period (e.g., 5 years or 10 years), a perpetual SIP keeps running until you decide to cancel it.

How Does a Perpetual SIP Work?

A perpetual SIP works in the same way as a regular SIP, except that there is no fixed tenure. Here’s how it operates:

  1. Choose a mutual fund – Select a mutual fund scheme that aligns with your financial goals.
  2. Set Up the SIP – While filling in the SIP registration form, you need to specify:
    • Investment amount (e.g., ₹2,000 per month)
    • Frequency of investment (e.g., monthly or quarterly)
    • Start date
    • End date (if left blank, it becomes perpetual)
  3. Auto-debit from your account – The SIP amount is automatically deducted from your bank account on the scheduled date.
  4. Continues until cancellation – Since it is perpetual, the SIP will continue for as long as you maintain sufficient funds in your bank account. You must manually request cancellation if you wish to stop it.

Advantages of Perpetual SIP

  1. No need to renew: With a fixed-tenure SIP, investors need to renew their SIP when it reaches the end date. A perpetual SIP eliminates this hassle by continuing indefinitely.
  2. Long-term wealth creation: A perpetual SIP ensures continuous investment without interruptions, helping investors take advantage of long-term wealth accumulation through the power of compounding.
  3. Flexibility to stop anytime: Unlike a fixed-term SIP, which stops automatically at the end of the tenure, a perpetual SIP continues unless the investor decides to stop it. This provides greater flexibility, allowing investors to continue investing as long as they want without needing to extend the tenure manually.
  4. Avoids missing investment opportunities: Sometimes, investors forget to renew their SIPs after they expire. This can lead to missed investment opportunities. A perpetual SIP ensures that investments keep going without a break, helping investors stay invested in the market.
  5. Ideal for long-term investors: If you are investing for retirement, your child’s education, or other long-term goals, a perpetual SIP can be beneficial. It ensures that investments continue seamlessly for decades.

Disadvantages of Perpetual SIP

  • Risk of forgetting to stop the SIP: Since a perpetual SIP keeps running indefinitely, some investors may forget to stop it when they no longer need it.
  • Liquidity constraints: If an investor faces financial difficulties and forgets to stop the SIP, it could lead to liquidity issues where money is locked in investments instead of being available for urgent needs.
  • Manual cancellation required: Unlike a fixed-tenure SIP, where investments stop automatically, a perpetual SIP requires the investor to cancel it manually.
  • Bank account dependency: Since the SIP amount is debited from the bank account automatically, any insufficient balance or bank account closure may lead to SIP transaction failures, possibly leading to penalties or SIP cancellation by the mutual fund house.
  • Might not align with changing financial goals: Over time, your financial goals and investment strategy may change. A perpetual SIP continues indefinitely, which means you may keep investing in a fund that no longer aligns with your updated financial objectives unless you actively monitor it.

How to Stop a Perpetual SIP?

If you wish to stop a perpetual SIP, follow these steps:

  1. Login to your mutual fund account – Visit the mutual fund’s website or your investment platform.
  2. Go to the SIP management section – Find the section where active SIPs are listed.
  3. Select the perpetual SIP – Click on the SIP you want to cancel.
  4. Request cancellation – Follow the steps to cancel the SIP. Some fund houses may require a written request for cancellation.
  5. Confirm the cancellation – Once cancelled, ensure that no further debits are made from your bank account.

Most platforms allow SIP cancellation within 7–10 working days. However, it is always good to check with your mutual fund house for specific procedures.

Should You Choose a Perpetual SIP?

A perpetual SIP is a good option for long-term investors who want to build wealth without worrying about renewing their SIP periodically. You should opt for a perpetual SIP if:

  • You have long-term investment goals: If you are investing for retirement, children’s education, or wealth creation over 15–20 years, a perpetual SIP makes sense.
  • You want a hassle-free investment: A perpetual SIP eliminates the need for manual renewals, making it a stress-free investment method.
  • You can monitor your portfolio regularly: If you actively track your investments and make necessary changes when required, a perpetual SIP allows flexibility.
  • You want to benefit from market cycles: Since perpetual SIPs continue indefinitely, you can take advantage of market fluctuations without worrying about stopping and restarting investments.

Conclusion

A perpetual SIP is a Systematic Investment Plan with no fixed end date, allowing investments to continue indefinitely until cancelled manually. It is a convenient option for long-term investors who want to keep investing without renewal hassles.

However, investors should monitor their SIPs regularly to ensure they align with their financial goals. If needed, they can cancel the SIP at any time.

By understanding how a perpetual SIP works, you can make an informed decision on whether it fits your investment strategy. Happy investing!

FAQs

What happens if I forget to cancel my perpetual SIP?

If you forget to cancel your perpetual SIP, the investments will continue indefinitely. You must manually request cancellation to stop further investments.

Is a perpetual SIP better than a fixed-term SIP?

A perpetual SIP is better for long-term investors who do not want to renew their SIPs periodically. However, if you prefer a structured investment plan with a fixed tenure, a fixed-term SIP may be better.

Can I change the amount of my perpetual SIP later?

Yes, you can modify the SIP amount by submitting a change request through your mutual fund provider or investment platform.

Will a perpetual SIP continue if my bank balance is low?

If there are insufficient funds in your bank account, the SIP transaction may fail. Repeated failures could lead to cancellation by the mutual fund house.