Mutual fund investments: How to ‘pause’ your SIP

Everyone loves to make money. Investment is the key to wealth creation. By investing smartly in mutual fund investments, wealth managers generate a substantial amount of money for their clients. But what is a mutual fund?

A mutual fund is an investment vehicle which is professionally managed by a mutual fund expert known as the fund manager who poolsthe money of various investors and invests it in diversified securities. You can invest in mutual funds online via SIP, i.e. Systematic Investment Plan or lumpsum. A SIP mutual fund permits individuals to invest a fixed amount periodically in mutual funds, thusinstilling a sense of disciplined investment in them.

Are you wondering how to invest in SIP? It’s quite simple. Just get your KYC (Know Your Customer) verification done and choose the mutual fund you wish to invest in. Also, specify the amount you wish to invest in your preferred mutual fund. This amount will be debited from your account periodically. It could be daily, weekly, monthly, semi-annually, annually, etc.

An SIP investment is designed to last until the end date mentioned in the application form. However, there are times when individuals decide to stop their SIP investment and exit mutual funds when the market starts to fall.

Ideally, an investor should increase their SIP amount and buy more fund units during such times of despair. One should try to avoid pausing their SIP investments as much as possible as it can turn into a bad habit. However, different situations call for different solutions. There are times when you might fall short on your finances due to some financial emergency.You can use a SIP Calculator to calculate the returns you would earn on your SIP investments and also tells you how much you would need to invest every month to earn a target corpus.

If, for some reason, you do need to pause your SIP, here are a few points you must note:

Pause period: SIP investments can be paused only for a specific period as specified by the AMC (Asset Management Company).

Form: An individual must fill an SIP pause form. This form can be availed from the Investor Service Center or the AMC. You can also download it from the mutual fund website.

Details:The start and the end date of the SIP pause must be distinctly mentioned in the form. The form also asks for additional informationaboutthe SIP folio, like the investor’s name and the folio number. All unitholders are further required to sign the form.

Bank mandate: The SIP pause form also contains a bank mandate that needs to be duly filled and signed by the investor. This mandate allows the AMC to instruct the bank to not debit any amount towards SIP during the pause period.

Submission: The SIP pause form must be submitted to the AMC at least one month beforeyou want pause your SIP investments. This form can be submitted at any branch office of the AMC.

Resumption of SIP:After the SIP pause period is completed, your SIP investment will automatically resume with the same conditions that were prevalent when the SIP was in effect.

Point to note:Not all AMCs provide the pause facility to their investors. Different fund houses have different conditions to be adhered to. It’s always advised to check with your AMC while registering for an SIP. Also, mutual funds allow investors to pause their SIPs only once during the entire tenure.

Investing in mutual funds is a sure-shot way of creating wealth over time and we recommend that you start now. Happy Investing!

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