The COVID-19 pandemic has certainly caused a lot of havoc in the lives of individuals from all over the world. Several business person have incurred a loss or no earnings during such difficult times. Salaried individuals aren’t safe from this havoc too – many individuals have either faced a downsizing in their companies or job loss. During such situations when your cash flow gets severely hit, it is possible that you might pause or ultimately stop your SIP investments. This might not be the worst decision. Let’s understand how to stop your SIP investments.
Before we dive into how to stop your SIP investments, let’s quickly recall what SIP investment is. SIP is a means offered to investors to help them invest in mutual funds. Under this mode of investment, a predetermined sum of investment amount is invested at regular intervals for a predetermined period. The SIP investment amount can be as low as Rs 100 per month.
How to discontinue or stop SIP investments?
As the markets hit the peak, it might not be the worst decision if you stop your SIP investments right now due to two reasons. First, with the markets touching the peak, the (Net Asset Value) NAV of mutual funds would be exceptionally high. Second, with your cash flows being hit, you might not have the necessary resources to invest in SIP. So, it makes sense to pause your SIP investments for a brief period, or even ultimately stop them if need arise.
In a SIP investment facility, an investor needs to provide a mandate to their bank from where the SIP instalments are initiated regularly. Post that, you must inform the fund house or the AMC (asset management company) through the online facility of discontinuation of SIP investments. Failure to do so might result in the ECS (electronic clearing service) mandate to bounce which is not a preferable situation. Several fund houses offer the facility to pause your SIP investments for a while.
However, if you wish to completely stop your SIP investments, then there are two ways – offline mode and online mode. Both the modes will help you to stop your SIP investments. There is an SIP pause form available on the websites of all mutual fund houses and AMCs. An investor must fill certain details including details of the investor, details of the SIP, when they wish to pause their SIPs, when they wish to resume their SIPs, etc. An investor must submit this form at least 15 days before they wish to pause or stop their SIP investments.
Is it a good idea to pause or stop your SIP investments?
Usually, mutual fund experts frown at the idea of pausing SIP investments. However, in the current situation it might not be the worst idea to pause your SIP investments. It all depends on your financial situation and the market conditions. You can consult a financial advisor who can better guide on whether or not you should pause your SIP investments. Happy investing!