There may be times when a financial hardship prevents you from making your mutual fund SIP instalment payments. It is quite okay to take a vacation even if you have other debt responsibilities because SIP in equity funds is a long-term investment strategy.
While mutual fund companies don’t charge late fees for a few SIP instalments, your SIP will be automatically terminated if you miss three consecutive payments. Additionally, your bank will fine you if you fail to honour the auto-debit payments.
What If You Missed Your SIP Payment?
Investors frequently worry about what would happen if their account balance drops too low or they cannot pay for their SIP for any other reason. So, if you, too, have experienced this, you are not alone. Keep in mind that failing to make a SIP payment is very typical.
One of the leading causes of many investors needing to remember to pay their instalments is a low bank account balance. However, you should be fine if you miss a SIP instalment. In a situation like that, your investments will still be made. The fund house would also not impose a fine for failing to pay.
A SIP investment may appear to have only one drawback—an inadequate corpus resulting from a missed instalment. Many consumers are unaware that they can still deposit money into their bank even if they have delayed a SIP payment because their contribution will be processed smoothly as soon as the next SIP date approaches. The fact that their investment won’t suffer due to a skipped SIP instalment is best.
Forsee a financial crunch?
Continue your SIPs if you have a steady income and the means to do so. In the long run, this is beneficial. However, only invest if your revenue is limited because you cannot do so while experiencing cash-flow issues. You can halt your contributions to mutual funds using SIPs and continue them whenever you have the time, which is one of the benefits.
If you are having difficulties paying your bills, there is a better method to skip a few SIP instalments. If you anticipate a future cash need, you can halt your SIP by filing a SIP Stop Request to the equity investment firm at least 30 days beforehand. You can use an application to submit the request offline or online.
How to prevent missing your mutual fund SIP?
When investors believe they won’t be able to make mutual fund SIP payments in the future, it is best to stop them from avoiding this situation. The mutual fund investments that have already been made into the plan will not be withdrawn or stop producing returns just because the SIP has been stopped.
Additionally, the AMC and the Bank are not charged any additional fees should the SIP be temporarily discontinued and later reinstated. You must contact your Wholesaler or AMC either offline or online to place the SIP stop/pause request, and you must do so at least 30 days in advance.
When an investor’s bank account balance is insufficient, or your mandate is not granted, SIP instalments typically occur. Most investors believe skipping a SIP at this time could result in penalties or the cancellation of future SIPs, among other things.
AMC will stop paying you for future SIP instalments if you miss three consecutive SIP payments. Additionally, your bank will impose a penalty if your account has an insufficient balance (similar to a cheque bounce case).
You should be reassured if you have delayed a few SIP instalments because of unforeseen circumstances. But be sure you realise that you can still skip several SIP payments because doing so will significantly harm your corpus.
Avoid losing the SIP instalment at any cost. If you can’t avoid missing your SIP payment, make up for the loss by making further purchases in the scheme.