Mutual Funds
by 5paisa Research Team Last Updated: 2022-11-28T12:35:34+05:30

Introduction

SIPs or a Systematic Investment Plan is one of the best ways to meet your monthly investment goals. When you activate a SIP to invest in a particular mutual fund, a fixed amount is deducted from your bank account. However, there are times when you might not have the required amount to invest.

For such instances, you must know how to stop SIP. The process of stopping SIPs is quite simple. If you are investing in a mutual fund and have activated a monthly payment system, you must know how to stop mutual fund SIP. If you want to stop your SIP payments, read on to learn the different ways you can do so.
 

Why do investors cancel or pause their SIP in between the tenure?

There are several reasons why investors might want to pause or cancel their SIP. If you are one of those investors, you must know how to cancel a SIP. Some of the most common reasons for cancelling a SIP are:

●  Investors might want to withdraw their investments or liquidate the mutual funds if the market fluctuates. They don't want their investment to bring losses. Hence, to avoid these losses, they might want to stop their active SIPs.

●  If the mutual fund you have invested in performs poorly for a long time, you must know how to stop a mutual fund SIP. The performance might turn the investor against the fund and make them want to withdraw their money from the investment.

●  An investor would want to cancel the SIP if the overall objective of the fund changes when there is a change in the fund's objective, even if the asset allocation of the fund changes. Hence, the rate of returns can be negatively impacted.

●  There have been several instances where the fund manager changes; hence, the investing pattern of the fund might also change. If you want to safeguard yourself from these externalities, you can cancel your SIP.
●  An investor might also want to cancel the SIP if they have any financial emergency and need funds for a task that needs immediate attention.

Hence, several instances can influence the investor to cancel the SIPs. As an investor, you must know how to cancel a mutual fund SIP to fund your requirements or to get out of a risky investment.

 

How to stop mutual fund SIP temporarily?

You can pause your SIPs instead of cancelling them if you need some funds for a short duration. You must follow the following steps to stop your SIP temporarily:

•    Reach out to your bank and ask them to cancel the auto debit option for your SIP payments
•    Reach out to the bank and let them know when you plan to reactivate the SIP payments

However, you can only suspend a SIP temporarily for two months. Post that, if you give no initiation to the bank to restart the SIP, the SIP will be cancelled automatically by the Asset Management Company.

herefore, you must avoid skipping the SIP payments for over two months.

 

How to stop SIP online?

You must know how to stop SIP online if you use trading apps or other online methods to invest in mutual funds. There are different ways of cancelling your SIP online.

If you are looking for answers to how to cancel SIP online, you must explore the different SIP cancellation options available to you. SIPs are voluntary, and you have complete control over them. Here's how to close SIP online using different methods:

● Visit the AMC Website

You must visit the mutual fund website to make the SIP payments. You must have your folio number and bank account details handy if you want to cancel the SIP. You should also have access to your login credentials to access the website.

Once you enter the portal, select the SIP you want to cancel or pause. Click on the 'Cancel SIP' option. The AMC will take up to 21 days to process your request and cancel the SIP payments. Once the request is processed, the automatic payments will stop. However, the investments you made through the SIPs in the past will remain invested in the fund. If you are looking for an easy way how to stop SIP in mutual funds online, you can do it via your trading app instead.

● Reach out to an agent

If you have invested in an online agent, you must reach out to them if you want to cancel your SIP payments. The agent will place the cancellation request on your behalf. The agent will reach out to the AMC managing the fund and request a cancellation. Once the request is processed, they will inform the investors.

● Online Distributor Platform

If you invested in a mutual fund and activated SIP payments via an online distributor platform, you can use the platform to cancel the SIP. You can log in to the platform and click on the 'Cancel SIP' option for the fund you want to stop investing in from the upcoming methods.
 

How to stop SIP offline?

There are several online methods to cancel a SIP. However, you must know how to stop mutual fund SIP offline. You must reach out to the Asset Management Company managing the mutual fund in which you have made the investments and inform them that you are interested in cancelling the SIP. Post that, collect the Appointment Form from the AMC's office or the Registrar and Transfer agents.

You must fill in all the crucial details about the investment, like the folio number, the name of the mutual fund scheme, the details of the bank account linked to the mutual fund, the SIP amount, etc. You must also indicate your desired end date for the SIP payments on the form.

Once you duly fill out the form, submit it to the AMC or the RTA office. The A<MC will place a cancellation request, which will be processed in the next 21 days. However, depending on the AMC, the cancellation process might take a day or two more. Also, the investor must visit the bank and fulfil the NACH mandate by requesting the bank to cancel the SIP.

Once the investor submits the written confirmation from the bank to the AMC, the biller will be removed from the system. After these steps, no SIP deductions will be made from the investor account.
 

Conclusion

If you are investing monthly in a mutual fund and have an active SIP, you must know how to stop a mutual fund SIP. It is important to be aware of the process as you might be in urgent need of funds and need access to your entire income. You may also want to cancel a SIP if the market is not performing up to the mark.

Therefore, consider different ways how to cancel mutual fund SIP before you make the actual cancellation. You must compare all the options and choose a convenient way to cancel your SIPs. Also, you must check the SIP cancellation charges before you put in your request.
 

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More About Mutual Funds

Frequently Asked Questions

In the case of a direct plan, the investor invests in a mutual fund directly through an AMC. In contrast, in the case of regular plans, the investor invests in a mutual fund via an agent or any other intermediaries.

There are about ten fund categories under equity funds. Some popular equity fund categories include large cap, mid cap, small cap, multi cap, value fund, thematic fund, etc.

Tax-saver mutual funds include ELSS and other Equity Linked Schemes. You don't have to pay taxes on the amount you invest in an ELSS mutual fund.

Yes, an investor can stop all the SIPs together. However, they need to place a cancellation request for all the SIPs on the same day.
 
 

Generally, there are no penalties for cancelling a SIP. However, if your investments have a lock-in period or the AMC has some policies, you might be charged a small penalty.

A SIP can be paused for a maximum of 2 months. Post that, the AMC will automatically cancel the SIP. You must know how to stop SIP without redeeming if you want to restart the SIPs.

Yes, you can easily collect the SIP collection form from the AMC.