Let's understand what is exit load and if it's applicable when SIPs are discontinued
03-Feb-2023 •Ravi Banagere
Does exit load apply in case of stoppage of SIP? If so, how is it calculated? - N.K. Shinghal
Exit load is the charge levied when an investor redeems or sells their mutual fund units within a defined period. This is to discourage investors from selling their mutual funds before holding them for a suitable amount of time. Exit loads vary from one fund to another, and not all mutual funds impose an exit load. Hence, investors should consider the exit load along with the expense ratio of a fund before planning to invest in it. Also, note that the exit load is not part of the expense ratio.
The process of calculating exit load is different for lump sum investing and SIP investing. Read our story on how to calculate exit load in detail.
To reiterate, exit load is applicable only when you sell or redeem your mutual funds, and there are no exit loads when you stop an SIP.
Suggested watch: How is exit load calculated?
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