Is it possible to stop your SIPs midway?

If you feel that your bank account doesn’t seem to justify the efforts you put in year after year to gain wealth, you might want to consider investing. Savings alone isn’t sufficient as inflation can eat up all the money that you saved over the years. Because of inflation, money losses its value. For example, a simple MBA course costed around Rs. 12 lakhs 5 years ago. In today’s time the same MBA costs around Rs. 20 lakhs. Now imagine how much would the same MBA course cost 10 years from now. To ensure that your savings are appreciated and increase its value with time, you may have to start investing. Investors are free to invest in schemes depending on their risk appetite. But they must bear in mind that investing is a long journey and one needs to invest in a disciplined manner.

The only way to ensure that you save and invest a fixed amount at periodic intervals to achieve long term capital appreciation is to start a monthly SIP in a mutual fund scheme of your choice. Systematic Investment Plan, often referred to as SIP, is an easy and convenient way to invest in mutual funds. The beauty of SIP investments is that even if you don’t have a large corpus you can still start investing in SIP.

What is SIP?

Systematic Investment Plan (SIP) is an investment process that allows investors to invest small fixed amounts at regular intervals. According to market regulator SEBI (Securities and Exchange Board of India), “A SIP allows an investor to invest regularly. One puts in a small amount every month that is invested in a mutual fund. A SIP allows one to take part in the stock market without trying to second-guess its movements.”

A KYC compliant individual can immediately start SIP investments from the comfort of their home or office. All they need is a laptop or a smartphone and a decent internet connection and they can start investing in SIP by visiting the AMCs website and navigating to the SIP section.

It is possible to start a SIP in almost every mutual fund scheme however investors are expected to reach out to their fund house for clarifying doubts.

Benefits of SIP investing

SIP allows investors to invest small amounts at regular intervals. The minimum investment amount might vary from scheme to scheme and fund house to fund house. There are certain schemes where you can even start a SIP by investing an amount as low as Rs. 500 per month. Long term investing in mutual funds like equity funds via SIP is known to allow investors to benefit from investment techniques like rupee cost averaging and power of compounding.

Can you stop your SIP investments midway?

The greatest advantage of SIPs is that they offer immense flexibility. Also, if you are new to mutual fund investing and aren’t sure how much you need to invest in order to get closer to your long term goals, refer to SIP calculator, a free online tool that gives you an estimate on corpus you might receive at the end your investment journey. Coming back to SIPs flexible nature, you can start a SIP in any mutual fund scheme at any point of time without having to time the market. In case the mutual fund scheme isn’t performing as per your expectations then you can even stop your SIP midway. There is no penalty or any charge for stopping your SIPs midway. Investors are free to stop their SIPs in any mutual fund scheme without having to personally inform the AMC.

 However, if your portfolio is in losses, it is advisable to not redeem your mutual fund units and remain invested as markets fluctuate from time to time.

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