How to Stop SIP Without Regret: A Quick Guide You Can’t Miss

Do you know 100 out of 99 start investing with SIP, and only 1% of the people continue their SIP? It can be well stated that systematic investment plans (SIPs) are a commonly used method to invest in mutual funds with regular and automated investments. 

A systematic investment plan, abbreviated as SIP, serves as a convenient and disciplined approach to mutual fund investing. It allows individuals to build wealth systematically over a period of time. The strategy is great enough for those who are looking forward to entering the financial markets without the requirement of a one-time large lump-sum investment.

However, there might be situations where you might wonder how to stop SIP.  The procedure is straightforward, and you will just have to understand certain steps for that. In that case, consider notifying the bank. The concerned respective asset management company, abbreviated as AMC, will take care of the decision of you wanting to stop the SIP.

The alternative approach to follow when you are concerned about how to stop SIP is to seek the assistance of your mutual fund agent. Here we will be presenting the detailed guide on how to stop SIP by listing the cancellation procedures, including the steps for how to stop SIP online. In addition, we will mention the essential documents to obtain before submitting to the asset management company or the online mutual fund registrar and transfer website.

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Documents needed to Stop SIP

When you are looking forward to how to stop SIP and you’re planning on doing it in the near future, then you will have to gather all the necessary information and related documents. Also consider the evaluation of the potential impact on the long-term financial objectives. During this phase, you will also have to ensure that your decision aligns with the overall investment strategy. The essential documents and the information that will be needed for the procedure include the following:

• Folio Number
• PAN card details
• Scheme Name 
• Bank Account Number That Is Linked to the SIP Scheme 
• SIP amount
• Preferred Termination Date 
• Recent Account Statement

When you have the documents mentioned above handy and organised beforehand, then it will help with the cancellation procedure, regardless of whether you are doing it online or offline. 

How To Stop SIP? – Step-by-Step Procedure

Before we discuss how to stop SIP online in detail, let us mention the steps for stopping the SIP investments in both modes. 

Step 1 – Reviewing the SIP terms

• Make sure to check the Terms & Conditions to understand the penalties for early termination. 
• Find out about the specific cancellation procedures. 
• Look for the options for pausing versus complete cancellation.

Step 2 – Choice between “Pausing” or “Stopping”

This is going to be an important decision, whether you are going to choose pausing or cancelling. Depending on your circumstances, you can go with the preference of either of the two. 

• When it comes to pausing, you will have to stay informed regarding the fact that most fund houses will be allowing the suspension for 3 to 6 months.  
• When it comes to cancelling, the permanent termination requires a new registration to restart.

NOTE: When it comes to temporary financial constraints, pausing the SIP investment is going to be a better choice because there will be flexibility with maintaining the investment strategy for the long term. 

How to stop SIP offline – Effective Approach to Cancelling SIP offline 

Step 1

First of all, you will have to obtain the SIP cancellation form from the asset management company or the distributor through which you have made the investments for the mutual fund SIP. Also, you can download it from the website.

Step 2

When it comes to how to stop SIP, you’ll have to fill in the required details, including the Folio number, PAN card details and the scheme name.

Step 3

Now submit the completed form to the AMC branch or the distributor.

Step 4

Keep the acknowledgement receipt for further references or for your records. 

How To Stop SIP Online? – Cancellation Steps to Follow

Online cancellation is highly recommended because it will be convenient through multiple channels. 

Approach 1: AMC Website or App Method

• You will have to log in with the essential credentials associated with the scheme.
• Now navigate to the Systematic Transactions” Section.
• You can choose the scheme that you want to terminate.
• Just confirm the cancellation request.

Approach 2: KYC Registration Agency (KRA) portal

• First of all, access the platforms like CAMS or KFin technologies. 
• Now, make the choice of my transactions that is followed by the systematic transaction option.
• Locate the active SIP scheme
• Now, click on the cancel option. Make sure to verify the cancellation details before you submit them.

Approach 3: Online Distributor Platform

• First of all, log in to the account. 
• Now, just move to the SIP management section
• Make the choice of the relevant fund and click on the cancellation option.  

Pausing or Stopping SIP – Which is a better choice?

Now that we’ve discussed how to stop SIP, you might have questions about whether it’s better to pause or fully stop. In this regard, it’s worth understanding that you will have to protect the financial interest while also maintaining good standing with the fund houses. 

Regardless of the choice that is pausing temporarily or cancelling the permanent SIP investment, ensure that you are following the step-by-step procedure for the smooth transition. Concerning how to stop SIP, another noteworthy point is to make sure that you are keeping the investment options open for the future. 

It’s worth noting that strategic pausing turns out to be a preferable choice over complete cancellation in the case, the financial constraints are temporary. 

What are some of the important reasons that investors stop or cancel SIPs?

Investors may go ahead with the choice of stopping or cancelling their mutual fund SIPs for plenty of reasons. These plans are designed for the promotion of disciplined investing over the long term, but there are certain factors that are enough to lead investors to discontinue them. Some of the common reasons prompting such a decision are as follows:

• Lack of patience

There has been an observed impatience in the new age investors, and they start searching for how to stop SIP. The growing popularity of the stock market has been attracting new-age investors to invest in mutual funds with high expectations of quick returns. However, when they see no quick returns or immediate gain, they become impatient and sometimes make the decision to stop their SIPs. 

• Fear of market failures

There might be sharp market fluctuations that cause anxiety among investors, prompting them to look for “How to Stop SIP Online”. It’s a common tendency, especially with those who have a low risk tolerance. During market fluctuation stages, many investors make a choice to opt out of their SIP investments. They have the common fear that they may lose all the money that they have invested, or there might be an instability in their investments.

• Unexpected financial emergencies

Life is always unpredictable, and there might be cases of financial emergencies, including medical expenses, job loss or certain household costs. And in that case, investors are usually forced to prioritise liquidity. Discontinuing or shopping for SIPs at such times will help with immediate financial relief. 

• Underperforming fund

The mutual fund sometimes underperforms over a prolonged period, and that is why investors lose confidence in the potential of meeting their financial goals and search for methods on how to stop SIP. They make the decision to discontinue their SIPs while exploring other options for investment.

• Changes in the fund’s objective or the asset allocation

Another reason why investors get the thought about how to stop SIP Online is that there might be a shift in the investment objective or the asset allocation of the mutual fund that isn’t aligning anymore with the investor’s financial strategy. In such cases, the investors might decide to stop SIPs or also relocate their funds elsewhere.

What are some of the reasons to avoid stopping the mutual fund? 

Though we have discussed the approaches and steps concerning how to stop SIP, however, it’s advisable to reconsider the decision associated with SIP investment suspension, discontinuing or even permanently stopping SIPs can significantly impact long-term investment goals. 

• Diminished compounding benefits – the regular investments will allow you to leverage the power of compounding. The returns that you can earn via an SIP investment are a summation of the initial principal and the subsequent earnings. When you are pausing the SIP, there will be an interruption in the growth cycle. 
• Spoiled investment discipline – SIPs are impeccable enough for developing the financial discipline by automation the investment process. Following the procedure for how to stop SIP and then stopping it will be responsible for disrupting the habit, and it usually becomes challenging to resume the regular investments in the future.
• Increased risk of market timing – pausing or stopping the SIP can also be responsible for the temptation of market timing, with the attempt to buy low and sell high. This is a strategy that comes with uncertainty and will result in suboptimal returns.  
• Potential compromise of the financial goals – the prolonged pause in the investments is responsible for hindering the accumulation of wealth that is necessary for the achievement of the long-term financial goals.

FAQs

1. Is there an option to restart my SIP after I have stopped it? 

When you’ve understood how to stop SIP and followed the approach, you might be left with questions about whether or not it’s possible to restart the investment. In that regard, it can be said that yes, there will be an opportunity for you to restart the is it after stopping it. But for that, you will require a completely new registration procedure.

2. Are there any charges that will be associated with stopping SIP investment?

The truth is that generally, there are no direct charges for stopping a SIP, but sometimes there will be cases where funds may come with exit loads if you withdraw the amount within a specific period after stopping the SIP. Ensure that you are reviewing the fund’s terms carefully to understand the potential implications that are associated with stopping the SIP investment.

Conclusion

Knowing how to stop SIP, how to stop SIP online, and how to stop SIP offline gives you total control of your investments. Whether due to money, changing goals, or fund performance, stopping your SIP can be done quite easily in a number of ways. Always consider why you are stopping your SIP, and consider alternatives to stopping it, such as the option of pausing it instead. A disciplined investment approach is crucial in achieving your long-term financial goals.