What happens when you miss SIP payments in-between?

Video

Many investors worry about loss in Mutual Funds if they are unable to make SIP payments during its tenure. Such situations can arise due to many reasons like you are undergoing some financial difficulty or uncertainty about job or business income. It’s natural that under such situations you may not be able to continue with your regular SIP payments. Since SIPs are a long-term investment option, it’s fine if you skip a few payments in-between. Unlike an insurance policy where non-payment of annual premium can lead to policy inactivation, here your investments made so far will continue to earn a return and you can withdraw it anytime. However, you would accumulate lower wealth than what you had initially expected and may miss your financial goals if you are too irregular with your SIP.

While Mutual Fund companies don’t penalize for non-payment of SIP instalments, your SIP will automatically be cancelled if you fail to make the payments for three consecutive months.Also your bank will penalize you for dishonoring the auto debit payments. Hence,it is advisable to stop the SIP by sending a request atleast 30days in advance if you foresee a cash crunch in future. Start a fresh SIP later whenever you feel financially comfortable.

 

282