How To Cancel A Mutual Fund SIP

by Alina Khan

Published On April 9, 2024

In this article

Systematic Investment Plans (SIPs) are a popular way to invest in mutual funds , allowing investors to contribute a fixed amount regularly, thus averaging out the entry cost over time. However, there may come a time when you need to stop or close your SIP due to changes in your financial goals, market conditions, or personal circumstances. Understanding how to stop mutual fund SIP or how to close mutual fund SIP is essential for managing your investments effectively.

The process to terminate an SIP is straightforward, but it is important to be aware of the terms and conditions associated with the cessation. Generally, investors can stop their SIPs at any time without any penalties, but it is advisable to check if there are any specific terms outlined by the mutual fund house regarding the discontinuation. The procedure typically involves logging into your investment account through the mutual fund’s website or mobile app, selecting the SIP you wish to stop, and submitting a request to terminate the plan. Alternatively, investors can also submit a physical request form to the mutual fund office or through their financial advisor.

It is crucial to consider the potential financial implications of stopping an SIP. Halting investments might affect long-term financial goals , and it is advisable to consult with a financial advisor to understand the impact thoroughly. Moreover, depending on the timing of the cancellation, there could be tax implications or exit loads to consider, which should be evaluated to make an informed decision.

Knowing how to stop or close your SIP can give you greater control over your financial planning, allowing you to adapt your investment strategies to better suit your evolving financial needs.

Understanding Mutual Fund SIP Cancellation

Cancelling a Systematic Investment Plans (SIPs) in a mutual fund may seem daunting, but it can be accomplished with minimal hassle if you know the right steps. Whether you need to know how to stop mutual fund SIP or how to cancel mutual fund SIP, the process typically involves a few simple actions. Investors can usually choose to stop their SIPs through an online platform, which is the most convenient method for many. The steps to stop SIP in mutual fund online include logging into your investment account on the mutual fund's website or app, navigating to the SIP section, selecting the specific SIP, and choosing the option to cancel it.

It is important to confirm the cancellation; some platforms may send a confirmation via email or SMS. For those who prefer offline methods, most fund houses also allow cancellation through a written request submitted at their offices or via postal mail. Prior to cancelling, it’s crucial to review any terms related to stopping SIPs, such as notice periods or any potential charges, to ensure that you are fully informed before you proceed.

SIP Cancellation Charges

Generally, SIP cancellation charges are not imposed when canceling a Systematic Investment Plan (SIP). However, some funds may levy exit fees if the SIP is terminated shortly after it begins and before completing a minimum period, typically one year. For example, some mutual funds charge an exit load of 2% if a SIP is canceled within the first 365 days and 1% if canceled between 365 and 730 days.

Additionally, temporarily pausing a SIP can impact long-term returns, with most fund houses allowing a pause for a maximum of 6 to 12 months. It's crucial to understand the potential SIP cancellation charges and other related fees before making changes to your investment plan.

Reasons for Cancelling a Mutual Fund SIP

Cancelling a Systematic Investment Plans (SIPs) in a mutual fund can be driven by various factors, each associated with an investor's changing circumstances or market conditions. Here are some detailed reasons why investors might consider how to stop SIP in mutual fund or how to close mutual fund SIP:

  • Financial Constraints: Economic hardships or changes in personal financial status often require reallocating funds. Investors might need to redirect their financial resources toward more immediate expenses like healthcare emergencies, education fees, or debt repayment.

  • Changing Financial Goals: As personal circumstances evolve, so might financial goals. For instance, buying a home or funding a business venture could necessitate substantial capital, prompting investors to rethink their long-term SIP commitments and possibly stop their ongoing SIPs.

  • Market Conditions: If an investor anticipates a downturn or believes the market is becoming too volatile, they might decide to pause or stop their SIP investments to minimize potential losses or to hold cash in anticipation of better investment opportunities.

  • Dissatisfaction with Fund Performance: If the mutual fund's performance consistently lags behind benchmarks or comparable funds, or if the management strategy changes unfavorably, investors might opt to cancel their SIP. Performance reviews might reveal that the fund no longer meets the risk-return profile that an investor is comfortable with.

  • Better Opportunities Elsewhere: Investors might come across alternative investment opportunities offering higher returns or better alignment with their risk appetite. In such cases, redirecting funds from an underperforming or unsatisfactory SIP to more lucrative or suitable options might warrant a cancellation.

  • Portfolio Rebalancing: Regular portfolio reviews might lead investors to adjust their asset allocations to maintain a desired level of risk and exposure. This could involve stopping certain SIPs to increase investment in other asset classes or diversify into new sectors.

  • Tax Planning Considerations: At times, investors might adjust their SIPs to optimize tax liabilities, especially near financial year ends, to make the most of various tax deductions and incentives available under different investment schemes.

Understanding these reasons and assessing personal or market conditions carefully can help investors make informed decisions on how to stop mutual fund SIP or how to cancel mutual fund sip effectively, ensuring alignment with their broader financial strategy and goals.

Reviewing SIP Terms and Conditions

Before proceeding with the cancellation of a SIP, it's important for investors to carefully review the terms and conditions associated with their investment. Here are key points to consider:

  • Notice Period: Most mutual funds require a notice period before the cancellation of a SIP can take effect. Check how many days in advance you must notify the fund house of your intention to stop your SIP.

  • Exit Charges: Some mutual funds impose exit charges if a SIP is stopped before a certain period, typically within a year or two from the start date. Review any associated costs that might apply.

  • Minimum Investment Period: Understand if there is a stipulated minimum investment period during which you cannot stop your SIP without incurring penalties.

  • Auto-Renewal Terms: Some SIPs have an auto-renewal clause that investors need to opt out of manually. Ensure you are aware of and manage these settings appropriately.

  • Documentation Requirements: Identify any specific forms or documentation required by the fund house to process the SIP cancellation.

Understanding these terms is crucial in ensuring that investors can make informed decisions about how to stop mutual fund SIP or how to cancel mutual fund SIP without unexpected penalties or complications.

For those who need guidance on how to stop SIP in mutual funds, most online platforms provide detailed steps or customer support to assist you through the process. It typically takes about 30 days for the cancellation request to be processed. Once the SIP is cancelled, you will receive a confirmation from your mutual fund house, and you can then proceed to redeem the accumulated units. Understanding how to close mutual fund SIP online can save you time and ensure a smooth discontinuation process.

How to Cancel SIP Online: Cancelling SIP Through Fund House Website

Cancelling a mutual fund SIP online is a straightforward process. If you are wondering how to cancel SIP online, start by logging into the investment platform where you initiated the SIP. Look for the SIP section in your account dashboard and select the option to cancel or stop the SIP. Fill out the necessary details and submit your request. Remember, if you hold SIPs backed by equity funds for less than 12 months, they may attract a hefty capital gains tax. Additionally, be mindful of any exit loads or lock-in periods associated with your SIP before finalizing the cancellation.

Cancelling a SIP online through a mutual funds website is a convenient option for most investors. Here is how to stop SIP in mutual fund online:

  • Log In to Your Account: Access your investment account on the fund house's official website where your SIP is managed.

  • Navigate to SIP Section: Find the section dedicated to SIP transactions. This section typically lists all your active SIPs.

  • Select the SIP to Cancel: Choose the SIP you wish to stop. There should be an option or link to modify or cancel the SIP.

  • Submit Cancellation Request: Follow the prompts to submit your cancellation request. You may need to fill out an online form or simply confirm your intent to cancel the SIP.

  • Receive Confirmation: After submitting your request, you should receive an email or SMS confirmation from the fund house. Keep this for your records.

  • Check for Follow-Up Actions: Some fund houses might require additional steps or confirmations, so follow up if necessary to ensure the SIP is indeed cancelled.

Following these steps will help you efficiently manage how to stop sip in mutual fund or how to close mutual fund SIP directly through the fund house’s website, offering a straightforward way to adjust your investment strategy as needed.

How to Cancel SIP Offline: Contacting Customer Service

If you prefer to cancel your SIP offline, the process involves a few more steps. To start, obtain a SIP cancellation form from your asset management company or online mutual fund registrars like CAMS or KFin Technologies Limited. Fill out the form with your bank account number, scheme name, PAN number, folio number, SIP amount, and the effective date for discontinuation. Submit the completed form to any branch of the AMC.

The process of how to stop SIP in mutual funds offline usually takes 14-21 days, although some fund houses may expedite it. During this period, it's essential to monitor your account for any updates and ensure that the SIP deductions have ceased. Knowing how to close mutual fund SIP through offline methods provides an alternative for those who prefer or need to handle transactions in person.

For investors who prefer or need to handle investment transactions offline, contacting customer service is an effective method to manage SIP cancellations. Here's how to proceed:

  • Locate Contact Information: Refer to your mutual fund statements or the official website to find the customer service phone number or the nearest branch office address.

  • Prepare Necessary Details: Have your account details, SIP information, and any identification ready to verify your identity and facilitate the process.

  • Call or Visit: You can either call the customer service number or visit the branch in person. Explain that you wish to stop your SIP and ask for the necessary steps or forms.

  • Complete Required Forms: Fill out any required forms accurately. These may need to be submitted in person, via mail, or through a secure online upload, as directed by customer service.

  • Follow Up: If you've submitted your cancellation request via phone or in person, request a receipt or a confirmation number for your records.

Using these steps to contact customer service allows you to handle how to stop mutual fund SIP, how to close mutual fund SIP, or how to close mutual fund SIP securely and effectively, ensuring that your instructions are processed correctly.

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Ensuring Cancellation Confirmation

Once you have submitted your request to stop a Systematic Investment Plans (SIPs) , obtaining a confirmation of the cancellation is crucial to ensure that the process has been completed successfully. Here’s how you can ensure that your SIP cancellation has been fully processed:

  • Confirmation Communication: Whether you cancel online or offline, ensure you receive a confirmation email, SMS, or a written statement from the fund house confirming the SIP cancellation.

  • Check Account Statements: Review subsequent account statements to ensure that no further SIP transactions are processed post-cancellation. There should be no deductions from your bank account for the SIP.

  • Contact Customer Support: If confirmation is not received within a reasonable timeframe, or if you notice continued deductions, contact customer support immediately. Provide them with your cancellation request details, including any confirmation numbers or copies of submitted forms.

  • Document Retention: Keep all related communications and documents regarding the SIP cancellation. This includes emails, physical mail confirmations, and any online confirmation screens you might have saved.

By following these steps, you can confidently manage how to stop sip in mutual fund online or offline and ensure that the process is concluded without any issues. Keeping thorough records and promptly addressing any discrepancies will protect your financial interests and ensure that your investment decisions are executed as intended.

Can I cancel a SIP at anytime?

Yes, you can cancel a SIP at anytime. However, it's important to consider a few factors before doing so. While most mutual funds do not impose SIP cancellation charges, some funds may have exit loads if the SIP is canceled within a certain period, typically the first year.

For instance, certain funds might charge an exit load of up to 2% if the SIP is canceled within 365 days and 1% if canceled between 365 and 730 days. Additionally, canceling a SIP anytime might impact your long-term investment goals and returns. Therefore, while you have the flexibility to cancel a SIP at anytime, it's advisable to review any potential charges and the impact on your financial objectives before making the decision.

Timing Considerations

When deciding to stop a SIP in a mutual fund, timing is a crucial factor to consider:

  • Cutoff Dates: Be aware of the fund's cutoff dates for SIP transactions. Submitting your cancellation request before the cutoff date can ensure that it is processed before the next scheduled deduction.

  • Notice Period: Check if there is a required notice period before your SIP cancellation takes effect. This period can vary by fund house.

  • Market Conditions: Consider market conditions and economic forecasts. Timing your exit during favorable conditions may maximize returns or minimize losses.

  • Financial Calendar: Align the cancellation with your financial calendar, considering tax implications or investment cycles that might affect your overall financial planning.

Reinvestment or Redemption Options

Upon stopping a SIP, you have options on how to manage the accumulated investment:

  • Reinvestment: Consider reinvesting the funds into another financial product that better suits your current financial goals or market outlook.

  • Redemption: You may choose to redeem your investments, especially if you need liquidity or if the investment has achieved its purpose.

  • Hold: Alternatively, you can hold the accumulated shares in the mutual fund even after stopping further contributions, allowing your investment to potentially grow based on fund performance.

Reviewing Portfolio and Financial Goals

After cancelling a SIP, it's important to review your overall portfolio and financial goals:

  • Risk Assessment: Evaluate the risk profile of your remaining investments to ensure they align with your current risk tolerance.

  • Diversification: Check if your portfolio is still well-diversified or if adjustments are needed after the SIP cancellation.

  • Goal Alignment: Ensure that your investment strategy is still on track to meet your financial goals. Adjustments may be necessary based on changes in your financial situation or objectives.

  • Periodic Reviews: Establish a routine for periodic reviews of your financial plan to adapt to new circumstances or opportunities as they arise. Be sure to get a free portfolio review to analyze your equity and mutual fund investments with our comprehensive Portfolio Review tool!

By considering these elements, you can effectively manage the process of how to stop mutual fund SIP, how to close mutual fund SIP, or how to close mutual fund SIP, ensuring that your investment decisions continue to support your financial aspirations.

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Frequently Asked Questions:

  1. Can I cancel my mutual fund SIP at any time?

Yes, you can cancel your mutual fund SIP at any time. However, it's advisable to check if there are any specific terms or notice periods required by the mutual fund company.

  1. Will there be any charges for cancelling my Mutual Fund SIP?

Usually, there are no charges for cancelling a SIP. However, if you cancel shortly after starting, some funds may impose exit charges if the SIP has not completed a stipulated minimum period, typically a year.

  1. How long does it take to process a SIP cancellation request?

The processing time for a SIP cancellation request can vary but typically takes about 7 to 15 days. It depends on the mutual fund house and the mode of cancellation (online or offline).

  1. Do I need to inform my bank separately if I cancel my SIP?

Yes, if your SIP payments are automated via a bank mandate (ECS or auto-debit), you should inform your bank separately to stop the automatic withdrawals, even after notifying the mutual fund house.

  1. Will cancelling my SIP affect my existing mutual fund investments?

Cancelling a SIP does not affect the value of the units already purchased and held in your mutual fund. Those investments will continue to be managed according to the fund's strategy and will be subject to market fluctuations. The cancellation only stops future SIP installments.

Read these articles to learn about key investment methodologies and concepts related to SIPs & Investment Advisors that can help you setup your portfolio:

    1. SIP Investment Guide: What is SIP, How to Start, Benefits, & Is It Worth It
    2. What is SIP in Mutual Funds? An Experts Guide
    3. Navigating the Challenge: How to Deal with Loss-Making SIPs
    4. Maximizing Portfolio Potential: The Role of an Investment Advisor
    5. Best SIP to Invest In Now for Maximum Returns: A Strategic Guide for Indian Investors
    6. SIP vs STP: Understanding Key Differences and Strategies
    7. Comprehensive Guide on Starting & Stopping SIPs: What are Perpetual SIPs in India?
    8. SIP vs. Lumpsum Investment Strategies: Comprehensive Guide for Best Returns

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