HOW TO STOP AN SIP IF CASH FLOWS GET HIT?

MF Investment: Why you should not stop your Mutual Fund SIP - The Financial  Express

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Owing to the increasing Covid-19 cases rapidly rising all over the world, there have been several cases where in an investor has either lost his job or been hit by a downsizing. Several cases also witnessed an individual been asked to take a pay cut. What would you do in such situations? Perhaps you are unable to cope up with the investments paid towards SIP investments. In such a scenario, one may even be forced to stop their SIP installments. And it might not seem a bad idea in that situation. 

How to stop an SIP (systematic investment plan) or discontinue SIP investments?

Currently, with the stock markets are skyrocketing, you would end up purchasing SIP mutual funds unit at a very high price. To avoid that, it might be a good idea to either pause your SIP installments, or completely discontinue the same. 

In an SIP investment facility, the onus lies on the investor to inform their banks about their decision to pause or stop the SIP investments. Now, if you fail to inform the bank about the pausing or the discontinuation of the SIP investments, the ECS (electronic clearing service) mandate will bounce in this case which is not a good thing to happen.

Hence, if you are pausing your SIP investments, it is a good idea to use the pause option for a few months. Several mutual fund houses provide this facility to investors. If you wish to discontinue your systematic investment plans, you have an option to choose between the two modes available to you – online mode and the offline mode. For instance, every mutual fund’s website will have a SIP pause form. An SIP pause form involves certain details such as periodicity of investment, date of investment, investment amount, reason to pause the SIP, when do you wish to pause the SIP investment, investor details, etc. This SIP pause form must be submitted at least 15 days before you wish to pause or stop your SIP investments. 

With markets so high, is it a good idea to pause or stop your SIP investments?

With the current market scenario, it may seem a good idea to partially withdraw your SIP investments provided that the Sensex is at its all time high at 51,000 points. Usually, no market expert or advisor would advise an investor to withdraw their SIP mutual fund investment plans, but one must also keep in minds certain factors such as book profit and market conditions. The last few months has observed the investors buying into SIP mutual funds at exceptionally high NAVs (net asset value) and some cases also record NAV. So, if you are into a situation that requires immediate money, withdrawing your SIP investments for a moment wouldn’t seem like a bad idea at all, provided that the markets are at its all time high. This may turn into a real blessing at that time. Additionally, investors who have been investing for some time would most probably be coming out with decent returns. Happy investing!