How to stop SIP?

Don’t know how to stop or pause your ongoing SIPs? Read this step by step guide

A Systematic Investment Plan, also known as SIP, is a neat technique that allows investors to invest in mutual funds, stocks, or ETFs like Nifty BeES or Liquid BeEs in a fixed amount in a regular time period. This allows investors to put their money in a disciplined manner by investing in a fixed period – whether that is weekly, fortnightly, monthly or quarterly. The biggest advantage of investing through SIP is that investors are not required to invest a significant lump sum amount, and can start with as low as ₹500.

Ideally, investors should not be stopping their SIP at all when markets turn bearish, as it results in the Net Asset Value (NAV) going down and allowing investors to buy more units. This rupee cost averaging feature of SIP, where investments are made at different prices over different periods, is what helps to protect the investments from market fluctuations. It is advisable to take advantage of this feature to mitigate risk and volatility for a comfortable long-term horizon.

This is why it is heavily advised to not stop your SIP regardless of market conditions.

Then why do investors stop their SIP?

Investors primarily stop their SIP due to fear. Investors tend to pull their money out of the stock markets and put it in safer instruments during tougher market conditions. Many investors find it difficult to think rationally for the long term and therefore, ignoring the long-term advantages of rupee cost averaging, they stop their SIP.

We would still advise anybody to continue their SIP. Radhika Gupta, the CEO of Edelweiss Asset Management Limited had also advised everyone to continue with their SIP during the corona crash of March 2021, adding that she was continuing her SIP without any massive changes as well.

However, if you do plan to stop your SIP or exit mutual funds plans due to any reason, we shall cover the steps in this article.

If you would like to know more on getting started, check out our how to start SIP article.

Online SIP cancellation

– Login to the brokerage website or mutual fund website where your SIPs are ongoing
– Browse through your ongoing SIP, select the one you would want to cancel and click on ‘Cancel SIP’

However, SIP deductions stop after a waiting period, if there is any. You are obligated to continue SIPs for a minimum of 6 months for severa mutual fund schemes.

Pausing SIP

Experts recommend that if you want to stop SIP due to financial constraints, prefer pausing them instead so that you can resume once convenient. It is advised by experts to maintain a minimum of three months’ worth of SIP in your emergency fund so that you can continue your investments to attain your long-term financial goals.

To pause your SIP, these are the steps:

– Login to the brokerage website or mutual fund website where your SIPs are ongoing
– Browse through all of your SIPs
– Select “Pause SIP” on all the SIPs you would want to pause
– Fill the SIP pause form where you are required to specify how long you intend to pause the SIPs. You can pause your SIPs for anywhere from one month to a maximum of six months in general
– On the expiry of this SIP pause period, your SIP will automatically resume, provided you have funds added to your account