How to Stop Your Mutual Fund SIP (Systematic Investment Plan)?

Starting a Systematic Investment Plan (SIP) to invest in mutual funds is a straightforward process. But sometimes your situation changes and you need to stop or cancel your SIP. The good news is that closing an SIP is nearly as simple as opening one.

SIP allows you to invest a fixed sum of money into a mutual fund at regular intervals. This can help you develop the discipline to save and take advantage of market ups and downs.

However, a change in your finances may mean you need to pause your future SIP investments. Maybe you lost your job or have already saved the amount you needed. Whatever the reason, putting your SIP on hold is a relatively painless process. This article will walk you through how to stop mutual fund SIP quickly and hassle-free.

Reasons to Stop an SIP

Here are some common reasons why you may need to stop your mutual fund SIP:

• Job Loss or Pay Cut: If you have faced a job loss, pay cut or other income disruption, you may need to cut down on expenses. Stopping the SIP is an easy way to reduce monthly cash outflows.
  
• Achieved Life Goal: If you started the SIP to build a corpus for a specific financial goal, like children’s education or retirement, you can discontinue or pause it once the target amount is achieved.
  
• Better Investment Opportunity: You may choose to stop investing in a fund that has consistently underperformed and switch your investment to a better fund.
  
• Change in Risk Appetite: With changing life stages, your financial priorities and risk tolerance levels also change. Review your investments from time to time and stop funds that no longer match your risk profile.

How to Cancel SIP? 3 Ways to Close a Mutual Fund

You can stop your mutual fund SIP through any of these modes:

1. Through Service Request Form

Every fund house provides a service request form to start or stop financial services like SIP. Here is the process to stop your SIP via a physical form:

• Download the Common Transaction Form from the AMC website or obtain a physical copy from their branches.
  
• Fill in the form with the folio number, scheme details, SIP start date and your personal information.
  
• In the request column, clearly specify your desire to stop the SIP. Sign the form.
  
• Submit the duly filled form to your nearest AMC branch office or the registrar’s office. Keep a photocopy of the form for future reference.

2. Using Online Facility

Nowadays, most fund houses provide the option to start or stop SIP online via the website or mobile app. Here is how to cancel your SIP online:

• Log in to your Mutual Fund account on the AMC website or mobile app
• Go to the SIP section and select the ‘stop SIP’ option
• Follow the on-screen instructions provided by the AMC platform to initiate the cancellation
• Confirm your cancellation request after verifying the SIP cancellation details

Once you place your SIP cancellation request online, you will receive a reference number or confirmation through SMS or email. Do keep those for your records.

3. Through a Designated Bank

If you had registered your SIP through an auto-debit facility with your bank account, you can also submit a request to the bank to stop the auto-debit. Here is the procedure:

• Give a written request to your bank to stop the standing instruction of SIP instalment transfer from your account to the fund house. Make sure to mention the AMC name, scheme details, SIP date and amount in your letter.
• Your bank will accordingly instruct the fund house on your behalf to stop the SIP.
• Once your bank processes the cancellation, SIP debits will stop from the next due date.

How Long Does SIP Cancellation Take?

Once you have submitted your SIP stop request through either of the above modes, how long does it take to reflect in your account?

Ideally, it should stop from the next instalment due date if there is a gap of at least 30 days between your request and the next SIP date.

However, based on your urgency, you can request to stop the SIP immediately or after the next SIP debit. But do keep in mind – immediate SIP cancellation is subject to fund house approval on a case-by-case basis.

Other Things to Note

Here are a few other important things you must keep in mind about stopping your mutual fund SIP:

• SIP cancellation is free of cost, and there is no exit load or penalty.
• You have to stop your SIP only if you want to stop the periodic investment. Your mutual fund units will continue to exist, and any previously purchased units will remain invested. So your account balance or corpus does not get impacted due to SIP cancellation.
• If you have opted for an SIP top-up facility, wherein the SIP amount rises periodically, stopping the SIP will also stop the top-up.

Conclusion

We hope this detailed guide on how to close mutual fund helps you take the necessary action at the appropriate time. Make sure to keep your investment portfolio in sync with your changing financial situation and future goals.

If you find yourself needing funds but don’t want to sell your mutual fund units, consider Fibe Loan Against Mutual Funds. With this option, you can access cash starting from ₹15,000, with amounts going up to ₹10 lakhs. The disbursal process is swift, taking just 10 minutes and you can opt for interest-only EMIs. The loan is based on your mutual fund units, allowing you to maintain your investment while addressing immediate financial needs.

FAQs

Can I stop SIP anytime and withdraw money?

Yes, you can stop your SIP anytime without any charges or penalties. However, to withdraw or redeem existing units in your mutual fund folio, there may be an exit load if you sell before the minimum holding period.

Will I get my money back if I cancel my SIP?

Cancelling your SIP only stops future SIP investments. The units you already hold will remain invested in your mutual fund schemes. You can sell or redeem these if you want the money back. Selling may attract an exit load based on your scheme’s policy.

What is the exit charge for SIP?

There are no exit charges to stop your SIP. You simply stop future debits. To sell existing units, an exit load applies if units are sold before the minimum holding period of the scheme.