HAVE YOU MISSED YOUR MUTUAL FUND SIP INSTALMENTS? FIND OUT THE CONSEQUENCES

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Systematic Investment Plans or SIPs have gained quite a momentum among retail investors in the last few decades. SIPs allow investors to invest in mutual funds a predetermined investment amount for a given period at regular intervals. This systematic and discipline approach towards investing has the potential to generate significant returns over the long run. SIP investments are quite flexible in nature as they permit SIP investors to customise their mutual funds investments basis their requirements and needs. For instance, an investor can change their investment amount as and when needed. They can also alter their investment duration. Additionally, you can also decide the periodicity of the intervals as per your convenience. Common intervals periods include daily, weekly, monthly, annually, etc.

SIPs allow you to invest in several mutual fund schemes including fixed-income investment options, equities, debt funds, etc. For instance, under debt funds, deposits are usually invested in different types of investments such as government securities (g-secs), treasury bills (T-bills), corporate bonds, money market securities, and other investment options.

There are several benefits to investing in mutual funds via SIP way of investing. Some popular advantages include rupee cost averaging, power of compounding, financial and investment discipline, ease of investing, easy on pockets (an investor can invest as low as Rs 100 per month in mutual funds via SIP), etc. With so many benefits of SIP investing, it is difficult to miss out on these incredible investment tools. However, there are instances when an investor mistakenly misses their SIP instalments. What happens in such scenarios? Read on to know more.

If you have missed your SIP installments due to any reason such as financial crunch, the AMC (asset management company) or the fund house would not stop the SIP investment. AMCs usually also do not charge any penalty to investors for up to two missed SIP installments. AMCs cancel the SIP investments only when an investor misses three SIP installments consecutively. Having said that, one should note that a bank has the power to penalise the investor for discrediting their auto-debit SIP payments.

Investing in mutual funds via SIP mode of investments allows an investor to meet their financial goals. When done right, SIP investments have huge potential to generate significant returns when invested for a prolonged duration. Hence, you might not want to miss on this incredible opportunity to generate wealth.

If for some reason, you are unable to pay your SIP installments, you can instead pause your SIP investments for the time being. This will help you to avoid the penalties charged by bank. An investor needs to provide a pause form after filling all the necessary details to the fund house. A minimum duration of one month from the date of pausing the investments is preferred. In the pause form, an investor needs to mention the date from which they wish to pause their investments and the date from which they wish to begin their investments.

Experts believe that the failure to comply with the SIP installments would not only result in lower accumulated wealth but also incapability in achieving long-term financial goals. Hence, to avoid a situation where due to a financial emergency, you need to stop your SIP investments, you must always have an emergency fund to cater to your needs during such unforseen times. Happy investing!