A Systematic Investment Plan (SIP) is a disciplined approach to investing in Mutual Funds periodically. However, there may be times when a SIP pause becomes necessary. The reasons could be financial constraints or market volatility. Read on to get valuable insights on how to stop SIP effectively while allowing you to manage your investments wisely.
Investments in Mutual Fund SIPs
Mutual Fund SIP is a smart investment method for investing a fixed amount of money over a chosen period. Consider the following factors and use a SIP calculator to assess potential returns before investing:
- Define your financial goals and choose the Mutual Fund SIP that aligns with them.
- Assess the extent of risk you can handle concerning market fluctuations and select funds accordingly.
- Evaluate past performance and consistency to assess the returns.
- Consider the expense ratio and fees charged during redemption, as they will affect overall returns.
- Review the experience and track record of the fund manager. Their skills can influence the returns.
- Choose a fund that provides a flexible pause facility.
What to do to Pause SIP?
-File a Pause application specifying the time duration for which the SIP would be paused.
-The application is found on the fund website
-Investors provide a bank mandate to the fund house to deduct a certain amount every month towards the SIP. The Pause application authorizes a pause on the bank mandate for the specific amount of time, as exact dates are mentioned.
-Mutual funds may have their own Pause policies and duration limits.
Example, ICICI Prudential SIPs
-Lets you pause for three months at the most.
-You can only pause once.
Once the pause period comes to an end, the SIP is resumed automatically and funds get debited from your account according to the SIP.
Important: Not all SIPs come with a pause feature.
What is SIP pause?
SIP pause allows you to suspend your contributions for various reasons temporarily. Unlike cancelling a SIP, it allows investment growth during the pause period if the Mutual Fund performs well. It provides flexibility for reassessing strategies or managing financial constraints while maintaining investment continuity.
How to pause your SIP?
You can choose for SIP pause through either the offline or the online method.
For SIP pause offline, proceed as follows:
- Contact the bank and fill out the SIP Pause form with the required details, like personal information, SIP details, duration of the pause and reason for the pause.
- Submit the form with supporting documents, like address proof, identity proof and bank account details.
- The bank will process the application and confirm the SIP pause through email or post.
- Contact the bank after the pause duration to restart the SIP.
For SIP pause online, follow the steps given below:
- Access your online investment account or portal provided by the Mutual Fund company or the platform where you have set up your SIP.
- Choose the 'SIP Management' or 'Manage Investments' option.
- ·Select the specific SIP you want to pause from the list of your active SIPs.
- Choose the 'SIP Pause' option from the drop-down menu.
- Specify the pause duration from the available options or enter a specific date to resume the SIP.
- Review the details entered for accuracy and submit.
- The Mutual Fund company will process the request. The confirmation of the pause will be conveyed through email or displayed on the screen.
- When you wish to resume your SIP, log in again and select the resume or restart option.
SIP pause is a valuable option for managing your investment journey effectively. Follow the outlined steps to pause your SIP and make informed decisions. Contact your investment provider for guidance and optimise your portfolio with a strategic SIP pause
