What if a SIP in a mutual fund program is stopped?

what if SIP in a mutual fund program is stopped?

An investor can do this by investing manageable sums over time and benefiting from investment growth.

For the time period he chooses, the investor’s bank account will automatically be debited with the SIP amount. Yet, a number of circumstances could arise that would force an investor to halt their SIP investment. The causes could be anything from irregular income to rising costs to urgent requirements.

All mutual fund schemes enable investors to halt SIPs whenever necessary and without incurring fees or penalties.

A SIP can often be stopped 30 to 45 days after the investor first makes the request. Future purchases in the scheme cease once the SIP is terminated, and the investor’s bank account is not automatically debited. The money that has already been invested stays there and increases over time.

Investors occasionally wonder what happens to the existing fund after the SIP stops, whether it continues to gain money, etc.

The below points address various such queries –

  • What is “SIP Stop” used for?

Depending on the frequency of the SIP, the SIP payment is immediately withdrawn from the investor’s bank account when a SIP is registered on a monthly, weekly, or annual periodic basis. Future purchases made under the scheme are halted as a result of SIP Stop canceling

 this auto deduction.

  • Is it possible to restart a halted SIP later?

Absolutely, after stopping a SIP, an investor can renew it whenever they want with the same amount or a revised amount in the same scheme.

  • Is there any cost or penalty associated with SIP Stop for the investor?               

Under a plan, there aren’t any fees or penalties associated with discontinuing a SIP. It is an entirely cost-free service.

  • Does the invested amount immediately redeem when a SIP stops?

No, the SIP stop merely ends the subsequent bank account auto debit. The sum that has already been invested continues to work for the scheme.

Any investor who wants to redeem their investment must make a separate request to the fund house.

There are few schemes that have lock-in periods for investments like Equity Linked Saving Schemes (ELSS). In such schemes, the amount equivalent to the value of free units (Units that are out of the lock-in period) can be redeemed by the investor when needed.

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