Investors use systematic investment plans (SIPs) of mutual funds to save for goals. SIPs offer benefits of compounding and rupee cost averaging. Sometimes, SIPinstructions need to be altered to align with goals while rebalancing of portfolio. Here is how an investor should go about it.
Many AMCs offer the pause option for ongoing SIPs. For this, the investor needs to give an advance request in writing (or submit a prescribed form) to pause the SIP for a period of one to three months. The investor must state the folio number and the starting and end date between which the SIP needs to be paused.
Modify SIP instruction
While doing the annual portfolio review and rebalancing exercise, the investor could want to increase or decrease his SIP installment amount, or the frequency of the instruction. The investor may also want to change the SIP scheme within the same fund house. In such cases, many AMCs offer a SIP modification option. The investor needs to give an instruction for modification of the SIP instruction or fill an SIP modification form. The application must be submitted to the nearest ISC or AMC office. The old SIP instruction and the new modified instruction must be clearly mentioned in the request.
Stop or cancel SIP
To stop or cancel an SIP instruction, the investor can send a written request to the AMC to stop the SIP standing instruction. Mutual funds also have standard forms for cancelling SIPs. Another alternative is to stop funding the bank account registered for auto debit for the SIP amount. If the account is not funded with the requisite SIP amount for four to five months consecutively, the AMC will stop the SIP after giving reminders to the investors to fund the account.
Point to note
- Any of the above requests must be submitted at least 30 days in advance before the next SIP installment.
- It is a good idea to check for specific AMC restrictions/rules with respect to use of the above facilities.