How to Stop SIP?: A Quick Guide

6 mins read
by Angel One
తెలుగుहिंदीमराठीગુજરાતી
Investing via SIPs offer several benefits like disciplined investing, and rupee-cost averaging, but at times you may have to stop SIP due to various reasons, and this can be done either online or offl
Long-term investing towards a financial goal is the most effective approach to investing. It helps you break down your investments over a prolonged period in a gradual and consistent manner. SIPs allow you to invest in a goal in a periodic manner. The advantages of investing with SIPs are numerous. However, there may be instances when you need to stop SIP for various reasons. Let's delve deeper into how to stop mutual fund SIP.

5 Reasons Why Investors Pause or Stop SIP Midway

1. Financial emergencies

Unexpected financial emergencies like job loss or medical expenses are one of the reasons to stop SIP. During such situations, an investor might have to redirect their funds towards other priorities.

2. Market volatility

During moments of market volatility, investors may pause or cancel their SIP. They may choose to wait for a more favourable investment environment or until they have a clear future direction in the market.

3. Shift in financial goals

Financial goals or investment strategy may change, necessitating the pause or cancellation of the SIP.

4. Shortage of funds

When faced with a temporary cash crunch or a liquidity issue, investors may have to stop SIP.

5. Underperformance of funds

The unsatisfactory performance of funds is another reason why investors may choose to pause or cancel their SIP and switch to a different fund. Do keep in mind that cancelling or pausing a SIP may affect your total returns and long-term financial goals. That’s why it should always be done after careful consideration and analysis of the situation.

Negative Impacts of Temporarily Stopping Your SIP

  1. You lose out on the benefits of compounding when you stop a SIP. The basic concept of compounding is to generate returns on the principal amount and the accumulated returns over a period of time. That’s why the benefit of compounding maximises when you invest regularly. Whenever you stop investing, you actually hinder the potential growth of your investment.
  2. A SIP is a disciplined way of investing, and stopping it may lead to a loss of discipline. Without the automatic investment feature, you may be less likely to invest regularly, and this may have an impact on your long-term financial goals.
  3. When you stop your SIP, you may be tempted to time the market and invest when the market is low. However, timing the market is a risky strategy as it requires accurate predictions of market movements, which can be difficult to do.
  4. Unless you start afresh with a new investment, you may not be able to achieve your financial goals.

How to Pause SIP?

Rather than cancelling your SIP mutual fund, you can stop it temporarily and resume whenever you are ready to get back to investing again. Here’s a quick and hassle-free way to stop SIP temporarily:
  • • Log in to your mutual fund account via the company's website or app.
  • • Navigate to the 'SIP' section.
  • • Select the SIP that you want to stop and click on the 'Pause' or 'Stop' option.
  • • Confirm your request by providing necessary details like the reason for stopping the SIP and the duration for which you want to pause it.
  • • Once you submit the request, your SIP will be stopped temporarily.
Alternatively, you can also provide a ‘stop payment’ instruction to the bank. Do keep in mind that the AMC will cancel the SIP if the 'stop payment' or low balance is retained for more than two months. This can lead to an instalment being missed or interrupted briefly. That’s why do not miss or stop SIP instalments for more than two months, especially when you are not looking at cancelling the SIP permanently. 

How to Stop SIP Online?

There are multiple ways using which you can cancel or temporarily stop your mutual fund SIP online. Here’s how to stop SIP online:

AMC website:

  • • Visit the mutual fund website where the SIP is still active and log in using your credentials. 
  • • Select the ongoing SIP that you wish to cancel and click on “Cancel SIP”. 
  • • The SIP will be discontinued within 21 working days.

Agent:

If you have purchased a SIP through an agent, notify them. The agent will then submit a cancellation request with the appropriate AMC.  

Online distributor platform:

If you have chosen a SIP through an online distributor platform, then you can access the mutual fund website of the distributor or agent. Just select the SIP instruction that needs to be terminated and then click on "Cancel/Stop" SIP.

How To Pause SIP?

KYC Registration Agencies (KRAs) Website

In India, KYC Registration Agencies play a vital role in financial processes, with five prominent entities: CAMS KRA, Karvy KRA, NSDL KRA, NSE KRA, and CVL KRA. The technique for cancelling a Systematic Investment Plan is largely similar across various platforms. To initiate SIP cancellation through CAMS KRA:
  • Access the CAMS website, by logging in with your user ID and password.
  • Navigate to 'My Transactions' in the top menu.
  • Choose 'Systematic Transactions' and then opt for 'Active.'
  • Select the specific active fund for SIP cancellation and click 'Cancel.'
If the cancel option is absent, it indicates either the asset management company's restriction on online cancellations or the SIP's origination outside CAMS, requiring a manual download of the cancellation form from the company's website and adherence to the offline cancellation process.

How to Stop SIP Offline?

Now that you know how to stop SIP online let’s see how we can do it offline. You can either notify your bank and respective AMCs, or you can reach out to your agent to cancel your mutual fund SIPs. Follow the below steps to cancel a mutual fund SIP offline:
  1. Reach out to your asset management firm for a SIP cancellation form.
  2. Fill in the necessary information and the date from which you want to terminate your plan.
  3. Submit the form at any of the AMC branches.
The cancellation process usually takes around 14-21 days. However, fund houses may complete the process in less time. So make sure that you do not have any SIP deposit deadlines during that period. You can also choose to stop your SIP by contacting the customer service department of your mutual fund company or by visiting the nearest branch office.

Cancelling ECS

Terminating your SIPs via ECS is another option available for those looking to manage their investments effectively. To initiate this process, promptly inform your bank about discontinuing the ECS and subsequently notify the asset management company (AMC). The SIP automatically ceases if ECS payments remain inactive for three consecutive months. Upon notifying the AMC and submitting the requisite form for termination, the discontinuation of the SIP takes approximately 21 days. In the event that you have submitted post-dated cheques for SIP payments, they will be returned promptly following the cessation of the ECS. This method provides an alternative route for those seeking to halt their SIPs, ensuring a streamlined and effective cancellation process with minimal hassle.

In Conclusion

Now that you know how to stop mutual fund SIP, you can plan your investments better. When it comes to SIPs, it is essential to have a time frame in mind. This will help you understand how your funds will perform in terms of accomplishing your desired financial goals over time. When investing through SIPs, remember that the average acquisition price is lower than if you tried to play the market by predicting its moves. That’s why it is always ideal to continue investing in your SIP rather than abandoning it shortly after you begin investing in mutual funds.

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FAQs

Will cancelling my SIP have an impact on my investment?

Cancelling your SIP has no effect on your current investments. However, if you cancel your SIP before the completion of the minimum investment period, you may miss out on the benefits of investing for a longer period.

Can I restart my SIP once it has been cancelled?

Yes, after cancelling your SIP, you can restart it by submitting a new SIP registration form. You should, however, verify with the mutual fund company or investment platform to see if there are any restrictions on continuing a SIP.

Can I modify my SIP rather than cancel it?

Yes, you can change the investment amount, frequency, or term of your SIP without facing any penalty.

Is it possible to cancel my SIP at any time?

You can cancel your SIP at any point in time. Although there are no penalties for cancelling a SIP, you may lose out on any benefits such as reduced loads or lock-in periods.