Can you stay invested in mutual funds after your SIPs stop? | Value Research Let’s learn what happens with your invested amount when you cancel your SIPs
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Can you stay invested in mutual funds after your SIPs stop?

Let's learn what happens with your invested amount when you cancel your SIPs

Mutual funds, unlike fixed deposits, don't have tenure. You can hold it as long as the fund is operational. In a fixed deposit (FD), you decide the time and invest in a fixed tenure ranging from seven days to several years. Once the tenure is over, the amount gets credited to your bank, or you can choose the option to auto-renew it further. Unlike fixed deposits, mutual funds do not guarantee a fixed return but have the potential to give higher returns.

When it comes to mutual funds, there's no such tenure. Though we have certain categories associated with different investment horizons. However, you don't have to necessarily hold on to your investment exactly for that duration. For example, short-duration funds are generally suggested for parking money that you may need after two to three years. However, you can continue to stay invested after completing three years for as long as you want. And your money would continue to get managed and earn returns in the same way. It is just that if you stay invested beyond the recommended time, your returns may not be optimised. Because for someone with a horizon beyond five years, equity funds provide a much better return.

Likewise when you invest in equity funds through SIP, even after your SIP ends (i.e., your fresh contributions stop) you can stay invested for as long as you want. SIPs are only a mode of investing in mutual funds. Through SIPs, investors become disciplined and consistent with their investments. If you stop your SIPs, your money will continue to get managed in the same way. So here, deciding/estimating the tenure/horizon is with the intent of choosing the right category for optimised returns.

Suggested watch: To increase my SIP amount, should I cancel the current SIP & start a new one?


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