How to Cancel Mutual Fund SIP?
Mutual fund investors often face strategic decisions, such as whether one should stop SIP temporarily or permanently. While much is said about initiating SIP investment and its benefits, the halting of SIP is rarely discussed.
In this blog, we will discuss the process of cancellation of SIP using online and offline modes, as well as the temporary vs. permanent cancellation of SIP, and understand the reasons behind cancelling SIP.
How to Cancel SIPs Online?
To cancel your mutual fund SIP (Systematic Investment Plan) online, you can follow several methods depending on how you initially set up the SIP:
1. Through the AMC (Asset Management Company) Website
- Step 1: Visit the official website of the AMC managing your mutual fund.
- Step 2: Log in using your credentials, such as your folio number and bank account details.
- Step 3: Navigate to the section where your ongoing SIPs are listed and select the SIP you wish to cancel.
- Step 4: Click on the “Cancel SIP” option and confirm your request. The cancellation process usually takes about 21 days to complete.
2. Using Online Distributor Platforms
- Step 1: Log into the respective platform.
- Step 2: Locate the SIP you want to cancel under the mutual funds section.
- Step 3: Select the “Cancel SIP” option and confirm the cancellation.
3. Through an Agent: If an agent facilitated your SIP, contact them to request the cancellation. The agent will process the request with the AMC on your behalf.
How to Cancel SIPs Offline?
The below steps show how to cancel a mutual fund SIP offline, according to many popular websites.
Step 1. Reach out to AMC or RTA:
- Go to the nearest Asset Management Company branch office managing your mutual fund or the Registrar and Transfer Agent office.
- Ask for a SIP cancellation form from the office.
Step 2. Fill Out the SIP Cancellation Form:
- Fill in the form with the requisite information, viz., folio number, mutual fund scheme name, bank account used for the said mutual fund, SIP amount, and the date you wish to end the SIP payments. Kindly ensure that all details are correct.
Step 3. Submit the Form:
- Submit the form to the AMC branch or RTA office. The cancellation process takes approximately 14 to 21 days, though some fund houses fast-track it.
Step 4. Verify with Your Bank:
- It’s also important to inform the bank to stop the automatic debit instructions relating to the SIP.
Step 5. Get Confirmation:
- Once the cancellation request is processed, AMC or RTA will send a confirmation regarding the SIP cancellation.
Temporary vs Permanent Cancellation of SIP
Investors can make a decision regarding temporary vs permanent cancellation of SIP using the following table:
| Temporary Cancellation | Permanent Cancellation |
| A temporary cancellation of a SIP would offer the investor the facility to pause contributions towards a scheme. Most of the AMCs or mutual fund platforms have the facility to pause the SIPs for 1 to 6 months. No deductions will be made from the investor’s account during this period. The SIP automatically starts again at the end of the pause period without any additional instructions from the investor’s end. | A temporary cancellation of an SIP would offer the investor the facility to pause contributions towards a scheme. Most of the AMCs or mutual fund platforms have the facility to pause the SIPs for 1 to 6 months. No deductions will be made from the investor’s account during this period. The SIP automatically starts again at the end of the pause period without any additional instructions from the investor’s end. |
Pause SIP vs Stop SIP
An investor can choose to pause vs stop SIP based on the information given in the following table:
| Pause SIP | Stop SIP |
| The decision to pause SIP is appropriate for short-term financial disturbances. It keeps the investments consistent and saves one from the hassle of restarting the SIPs later. This is ideal if the investor expects his or her financial condition to stabilize soon. | The decision to stop SIP is ideal if the fund’s underperformance continues, the investor’s goals are met, or there are significant changes in the fund’s management or strategy. It is a permanent solution, often accompanied by switching to another investment or fund. |
Reasons for Canceling SIP
There could be various reasons to cancel an initiated Systematic Investment Plan:
- Achievement of financial goals: An investor may be near his financial goals, such as buying a house or funding education. Now, the investor wants to realize the profits and move to safer investments so that accumulated wealth is not affected by market volatility.
- Changes in mutual fund’s fundamental attributes: There could be a situation where the mutual fund changes its investment strategy, asset allocation, or management. If such changes do not align with your risk tolerance or investment goals, you should cancel your SIP and look for alternatives.
- Consistent underperformance: If a mutual fund is underperforming its benchmark and peers for a considerably long period, say three years, then there must be something wrong with the management or investment strategy of the fund. Under such circumstances, cancellation of the SIP and funding better performers may be appropriate.
- Mutual fund portfolio rebalancing: Investors try to build a diversified portfolio of mutual funds that invest in different asset classes. Over time, some mutual funds outperform others and exceed their target allocation. The rebalancing process could involve reducing exposure to some mutual funds to go back to the target allocation, possibly leading to the cancellation of the SIPs.
- Financial emergency: Unforeseen financial disasters, such as the loss of a job or a medical emergency, may cause one to stop SIPs as money is required elsewhere. In such cases, liquidity for immediate needs may be prioritized over long-term investments.
Conclusion
Whether to pause or stop an SIP fully depends on the financial status and investment objectives of an individual. Pausing can be done in case of short-term disruption to finances, and it also has the added advantage that the investor will not have to re-activate it afresh. Permanent cancellation may have to be done in cases of prolonged underperformance or if the goal is met. Cancelling of SIP can be done conveniently online through the AMC portals/distributor platforms or offline through the offices of AMCs/RTAs. However, you must consult a financial advisor before making any investment decision.
Frequently Asked Questions (FAQs)
What happens if I miss a SIP installment?
Missing a SIP installment may not significantly impact long-term returns. However, regular investing is recommended to benefit from rupee cost averaging.
Are there any charges for cancelling a SIP?
Most AMCs do not charge for cancelling a SIP. However, check with your specific AMC or distributor for any applicable fees or conditions.
Can I restart my SIP after pausing it?
Yes, when you pause a SIP, it automatically restarts after the pause period ends without requiring additional steps from your end.
What could be the ideal tenure to continue a SIP?
It is always advisable to invest in SIPs for the long term, for at least five years or more, to ride through market cycles for potentially higher returns.
Can I switch SIP from one mutual fund to another?
Yes, one can switch from one mutual fund scheme to another within the same AMC or even across AMCs, subject to conditions and charges.
