SIP: Cancel, alter or renew

SIP: Cancel, alter or renew

​

Considering the investment discipline they help inculcate and the returns they promise, SIPs have strongly emerged as one of the most popular investment vehicles in the past one decade. Nevertheless, people are still not clear about their correct usage and the possible situations that can arise from them. For instance, a quick visit to any investment forum would reveal the doubts people have with regard to cancellation or alteration of SIPs mid-way. Not many people know how to handle such eventualities.

So, can you cancel your SIP mid-way?

Let’s say you put in a certain amount into a 36 months systematic investment plan, but find the going tough after only 3 months of its start date, and would like to stop it. Are you allowed to do that? Will you have to pay any penalties?

Yes, you can certainly cancel the SIP midway and you’ll not have to pay any penalty when you do that. SIPs are completely voluntary in nature and the AMCs (Asset Management Companies) or fund houses cannot levy any penalty/fees for the SIP discontinuation. The exact procedure of withdrawing from the SIP and the time taken for processing such cancellation request may vary from the fund house to fund house.

Please keep in mind that the SIP cancellation process normally takes anywhere from 2 to 4 weeks’ time. In the event that you enrolled into an SIP online  you’ll have to log into your account with the fund house and submit your cancellation request online only. Online requests may be processed quicker than the off-line ones

Is it possible to change the SIP amount midway?

Considering the fact that you can cancel your SIPs midway, it is also not impossible to cancel your already running SIP and replacing it with a new one with different amount and/or conditions. The process may be slightly more complicated in case you had submitted PDCs for your SIP. Furthermore, the terms, conditions and the exact procedure may vary from organisation to organisation. Hence, it’ll be best to get in touch with your fund house to learn about the exact alteration process in your case.

Is it possible to continue or renew a SIP after it completes its term?

Let’s say you took out a systematic investment plan with a duration of 36 months and would like to renew it for additional 3 years after it completes its term. Is that possible or would you have to setup a fresh SIP? While some holding companies may not allow you to renew your SIPs post their completion, asking you to start afresh, others may be flexible towards such arrangements. A large majority of fund houses or AMCs fall in the latter category.

To renew your SIP you’ll have to fill up the SIP renewal form provided by your fund house consisting of all the pertinent details. You’ll be permitted to make changes to your instalment amount, frequency, dates of investing etc. It is advisable that you send in such renewal instructions at least 30 working days prior to the expiry of your SIP. In case you had set up your original SIP on an online platform, the procedure and time taken for such requests may differ and be comparatively faster.

The thing about SIPs is that it is probably one of the most feasible and easily doable investment instruments. Investors should either ways start perpetual SIPs, as there is always a flexibility to alter or cancel SIPs at a later date.

Happy Investing