A Systematic Investment Plan (SIP) is one of the easiest and most disciplined ways to invest in mutual funds. Whether you’re planning long-term wealth, education goals, or retirement, SIPs help you invest small amounts regularly while taking advantage of compounding.
Here’s a simple guide on how to start a mutual fund SIP and what happens if you decide to pause or stop it later.
How to Start a Mutual Fund SIP (Step-by-Step Guide)
1. Complete Your KYC
Before investing, complete your KYC (Know Your Customer) using:
PAN
Aadhaar
Photo
Bank details
You can do this online via any mutual fund platform.
2. Choose a Mutual Fund Category
Select the fund based on your goal:
Equity funds → Long-term wealth
Debt funds → Stability + lower risk
Hybrid funds → Balanced approach
Goal-based investing makes SIPs far more effective.
3. Pick the SIP Amount
You can start with as low as:
₹100–₹500 per month in many funds.
Choose an amount you can comfortably maintain.
4. Select SIP Date and Frequency
Common SIP frequencies:
Monthly (most popular)
Weekly
Quarterly
Choose a date close to your salary or cash inflow cycle.
5. Set Up Auto-Debit
Enable:
NACH mandate or
UPI AutoPay
This ensures automatic monthly investment without manual action.
6. Track Your SIP Regularly
Review performance every 6–12 months, not daily. SIPs work best when held long-term.
What Happens If You Stop Your SIP Later?
Stopping your SIP does not close your investment. Here’s what actually happens:
1. Your Existing Investments Stay Safe
If you stop the SIP:
Your money already invested continues to grow
The mutual fund units stay in your account
You can redeem anytime
Stopping SIP ≠ Closing the mutual fund.
2. No Penalty or Charges for Stopping
Mutual funds do not charge for:
Stopping SIP
Pausing SIP
Reducing SIP amount
You have complete flexibility.
3. You Can Restart Anytime
You may:
Restart the same SIP
Start a new SIP in the same fund
Increase or decrease the amount
There are no restrictions.
4. You Can Pause Instead of Stopping
Most mutual funds allow a SIP Pause feature for:
1–6 months
Ideal if you're facing temporary financial issues.
5. You Lose the Benefit of Rupee Cost Averaging
If you stop:
You miss buying during dips
Long-term compounding slows down
SIPs work best when continued over many years.
Should You Stop a SIP?
You should not stop unless:
The fund is consistently underperforming
Your financial goals have changed
You face temporary financial stress (in which case, pause instead of stopping)
SIPs reward consistency more than timing.
FAQs
1. Can I stop my SIP anytime?
Yes, you can stop it anytime without any penalties.
2. What happens to my money if I stop the SIP?
Your invested amount continues to stay and grow in the mutual fund until you redeem it.
3. Will stopping a SIP affect my credit score?
No. SIPs are not loans or credit products.
4. Can I change my SIP amount later?
Yes, you can increase or decrease your SIP amount based on your comfort.
5. Should I pause or stop my SIP?
Pause is better for short-term issues. Stop only if your goals or fund performance change.
Published on : 20th November
Published by : SMITA
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