Strategies To Cease Mutual Fund Investments: A Guide

A Systematic Investment Plan (SIP) is a disciplined approach to investing in mutual funds periodically. However, there may be times when investors want to pause or cancel their SIPs. This could be due to financial constraints, market volatility, or a change in the fund's objective. It is important to know how to stop a mutual fund SIP to manage your investments effectively. In this article, we will discuss the reasons for stopping a mutual fund SIP and the steps to do so through both online and offline methods.

Cancelling a SIP online

Cancelling a SIP (Systematic Investment Plan) online is a simple and straightforward process. Here are the steps you need to follow:

Cancelling a SIP through the AMC Website:

• Visit the website of the Asset Management Company (AMC) managing your mutual fund.
• Log in to the portal using your folio number, PAN, and bank account number linked to the folio.
• Select the active SIP that you want to cancel.
• Click on the 'Cancel SIP' option.
• The cancellation process will take around 21 days to complete.

Cancelling a SIP through an Online Distributor Platform:

If you invested in the mutual fund through an online distributor platform, you can use the same platform to cancel your SIP:

• Log in to the online distributor platform.
• Click on the 'Cancel SIP' option for the fund you want to stop investing in.

Cancelling a SIP through an Agent:

If you invested through an online agent, you can reach out to them to cancel your SIP:

• Contact the agent and request them to place a cancellation request on your behalf.
• The agent will reach out to the AMC managing the fund and submit the cancellation request.
• Once the request is processed, the agent will inform you.

Cancelling a SIP through CAMS KRA:

You can also cancel your SIP through Computer Age Management Services (CAMS), a KYC Registration Agency (KRA):

• Visit the CAMS website (mycams.camsonline.com) and log in to your account.
• From the menu bar, choose 'My Transactions'.
• Select 'Systematic Transactions' and click on the 'active' option.
• Your active systematic transactions will be displayed.
• Click on the 'Cancel' option for the SIP you want to cancel.

Note: If there is no cancel button, it could mean that the SIP was not created using CAMS, or the AMC does not permit online cancellations.

Important Considerations:

• Before cancelling a SIP, ensure that you have valid reasons for doing so, as continuously stopping and starting SIPs can negatively impact your long-term returns.
• It is recommended to consult your investment manager or a financial expert to understand the full impact of cancelling your SIP on your financial goals.
• Cancelling a SIP will stop future investments, but your past investments made through the SIP will remain invested in the fund.
• There are usually no penalties for cancelling a SIP. However, if you redeem your investments before the completion of the SIP tenure, you may be subject to exit loads or other charges, depending on the specific mutual fund scheme.

Cancelling a SIP offline

Cancelling a SIP (Systematic Investment Plan) offline is a straightforward process. First, you must reach out to the Asset Management Company (AMC) managing the mutual fund and inform them of your intention to cancel. Next, you will need to collect and fill out an Appointment Form, which you can obtain from the AMC's office or the Registrar and Transfer agents. Ensure you have the following details to hand:

• Folio number
• Name of the mutual fund scheme
• Details of the bank account linked to the mutual fund
• SIP amount
• Desired end date for SIP payments

Once you have completed the form, submit it to the AMC or the Registrar and Transfer Agent (RTA) office. The AMC will then process your cancellation request, which can take up to 21 days, although this may vary depending on the AMC.

Finally, you must visit your bank and fulfil the NACH (National Automated Clearing House) mandate, requesting that they cancel the SIP. After you have submitted written confirmation of this to the AMC, the biller will be removed from the system, and no further SIP deductions will be made from your account.

Cancelling a SIP temporarily

Cancelling a SIP (Systematic Investment Plan) temporarily is a simple process. Here is a step-by-step guide:

• Contact your bank and request that they remove the auto-debit option for your SIP payments.
• Inform your bank about your plans to resume SIP payments and the date from which you want to restart.
• Keep in mind that you can only suspend a SIP temporarily for up to two months. After this period, if you do not initiate the restart with your bank, the SIP will be cancelled automatically by the Asset Management Company (AMC). Therefore, avoid skipping SIP payments for more than two months if you intend to continue with the investment.

Alternatively, you can pause your SIP through the following steps:

• Log in to your mutual fund account via the company's website or app.
• Navigate to the 'SIP' section.
• Select the SIP you want to stop and click on the 'Pause' or 'Stop' option.
• Confirm your request by providing necessary details such as the reason for stopping the SIP and the duration for which you want to pause it.
• Once you submit the request, your SIP will be stopped temporarily.

It is important to note that cancelling or pausing a SIP may affect your total returns and long-term financial goals. Therefore, it should be done after careful consideration and analysis of your situation.

Redeeming a SIP

Redeeming a Systematic Investment Plan (SIP) is when you withdraw your investment to raise money to meet interim or urgent needs. This means that you are selling part of your investment, not all of it. Your SIP is still active after you redeem the held units, and the following month, your SIP will continue to purchase units.

There are several reasons why you may want to redeem your SIP. These could include external factors like market fluctuations and volatility, or personal reasons like the need for funds to make immediate payments.

If you have bought mutual funds through an Asset Management Company (AMC), you can sign into their portal to redeem money at your convenience. You can also request redemption offline by visiting the AMC office and filling in a redemption form. Make sure the form is filled out accurately and signed. After submitting your request, you will receive your redemption amount via NEFT or a cheque in the mail.

If you have purchased your SIP with your Demat or trading account, you will receive an e-payout to the bank account registered with that account. You will need to submit a redemption request to do this.

If you hired an agent to invest in SIPs, contact the same agent to redeem it. They will fill out a redemption request with details of your SIP, including the number of units you want to redeem. You will then receive the amount via NEFT or cheque.

You can also use Computer Age Management Services (CAMS) to redeem your SIP. Download the redemption form, fill it out and submit it at a CAMS office. These requests cannot be cancelled, altered or revoked.

There are two types of redemption: unit-based and amount-based. In unit-based redemption, you specify how many units of mutual funds you want to redeem. The amount you will get is determined by the number of units and the prevailing Net Asset Value (NAV) of the mutual fund unit. In amount-based redemption, you specify the amount you want to redeem, and the number of units is automatically debited based on the NAV.

Most mutual funds expect you to invest for more than a year. If you want to exit the fund before this time, a penalty will usually be levied, called the exit load. This is typically around 1% of the total amount withdrawn.

You can also exit a mutual fund through a trading account or Demat, or directly via an AMC or distributor.

Pausing a SIP

Reasons for Pausing a SIP:

• External factors such as market fluctuations or personal reasons like needing funds for immediate payments.
• Job loss, pay cuts, a dip in the markets, or a shift in financial goals.
• Shortage of funds for a short duration.

Things to Keep in Mind:

• Inform your fund house in advance before your next SIP date. The bank has been instructed on the ECS mandate by the mutual fund houses, and they will need time to change it.
• The duration of the pause may vary among fund houses, so check with your fund house before deciding.
• The SIP pause facility is typically allowed for 1 to 2 times during the SIP mandate.

How to Pause Your SIP:

Online:

• Visit either CAMS or KFintech websites.
• On CAMS, click on 'My Transactions' in the side menu bar, then select 'Systematic Transactions'. On KFintech, select 'Transact Online' and then 'Pause/Cancel Systematic Transactions'.
• Select the relevant options to specify the mutual fund, transaction type, and fund house.
• Each SIP row will have 'Cancel' and 'Pause' buttons. Click 'Pause', select the start date and number of instalments, then verify the request.

Offline:

• Notify your fund house or ask your mutual fund agent/advisor.
• Request an SIP cancellation form from your AMC, CAMS, or KFintech.
• Fill in the required details, such as folio number, PAN number, SIP scheme name, bank account details, SIP amount, and the date from which SIP should be paused.
• Submit the paperwork at any branch of the AMC, CAMS, or KFintech.

Frequently asked questions