Can, when, how and should you pause your SIP
23-Mar-2023 •Research Desk
Long-term commitment is serious work. Therefore, it is human tendency that whenever we start an SIP investment and plan to invest for the long haul (because that's what the smartest investors of this world do), we get a little nervous. The first few questions that pop into our head are: "Can I pause it for some time? What if I don't have the SIP money every month? How do I pause it?"...and so on.
Hence why we used this safe space to address your commitment phobia...erm, SIP slip-up concerns. So, here we go:
Say I want to pause or take a break from my SIP. Is it possible?
Yes, you can. You can pause your SIPs online or offline for up to six months.
That said, there are a few fund houses that allow this pause facility for three months only.
Your SIPs will automatically resume on the expiry of the pause period.
Is there any penalty?
No, you are not charged by the mutual fund house.
By when should I need to pause my SIP?
You should freeze it 15 to 21 days before the next SIP date, depending on the AMC.
How do I pause my SIP?
You can pause it online by visiting either CAMS and KFintech.
Pausing your SIPs on CAMS
Pausing your SIPs on KFintech
You can also pause your SIPs by visiting the fund house's website. While the process might be different for each fund house, do remember to have your folio number with you.
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Can I pause my SIP offline?
You can do so by notifying your fund house. You may also ask your mutual fund agent/advisor to do it for you.
The process to pause SIP offline is as below:
How many times can I pause my SIPs?
Once or twice for the duration of the SIP investment. However, it differs from one fund house to the other.
Why are my SIPs not eligible for pause?
The pause facility is available for monthly SIPs only.
Then, there are some fund houses like Axis that allow the pause facility if your SIP is greater than Rs 1,000 and has completed six months.
What happens if I miss my SIPs for consecutive two to three months?
Missing an SIP for a month or two may not be a problem. But missing it for three months straight will terminate your SIP.
Will I incur a penalty for missing my SIP investment?
Even if you miss making one SIP, your bank may charge a penalty for defaulting on your SIP payment.
To avoid such a scenario, it's best you pause your SIP.
What happens if I am short of my SIP amount?
You will miss your SIP investment, and the bank may levy a bouncing charge for not paying your SIP that month.
Does missing or pausing my SIP affect my credit score?
No, it doesn't. Your credit score is impacted only when you miss repaying your loan.
And SIP is an investment, not a loan.
I had sufficient balance in my account but my SIP didn't go through. Has my SIP stopped?
Perhaps, your SIP has not been registered due to some reasons.
But if this has happened during an ongoing SIP period, you need to contact the support team of the mutual fund house or your agent/advisor.
Should I pause my SIPs when the market is at a high and resume when it goes down and vice versa?
NO. No one can time the market to perfection.
In fact, this is SIP's strength. It buys less when the market is expensive and more when it is cheap. Hence, there comes the very purpose of SIP investments. By averaging the purchase cost, it saves you from the dilemma of timing the market.
Suggested read: What is an SIP and how does it work?