Missed Your SIP Payment? Here’s What You Can Do Now!
A systematic investment plan or SIP is one of the superior means to invest in mutual funds. SIPs require the investor to invest an amount they can afford into a mutual fund scheme of their choice. Moreover, they are required to link their bank account to their SIP. The SIP amount is then debited on a monthly basis on the due date of the SIP.
What If You Missed Your SIP Payment?
One of the common concerns for investors is that what if their account balance becomes low or they are not able to pay for their SIP due to any reason? Well, if you too have been in the same situation, you are not alone. Remember, missing a SIP payment is extremely common. Insufficient balance in the bank account is one of the prime reasons that many investors forget to pay for their instalments. However, missing a SIP instalment is something you should not worry about. Your investments will continue in a case like such. Moreover, the fund house will also not charge a penalty for missing the payment.
What To Expect?
A SIP is an investment that may seem to come with the only drawback of an insufficient corpus due to a missed instalment. What many people do not know is that even if they have missed a SIP payment, they can put money into their bank account as their payment would easily be done as and when the next SIP date arrives. What’s best is that their investment won’t suffer due to a missed SIP instalment.
Things to Look Out for
Missing one or two SIP payments will not have any adverse reaction to your corpus. However, there are two things that you must keep in mind regarding your missing SIP payments. They are:
• If an investor missed their 3 consecutive SIP payments, their SIP investment is terminated by the mutual fund house.
• The bank may charge the investor a penalty at the time when the bank account is low and the investor misses out on a SIP payment. This is referred to as dishonouring the payment. A charge is involved in cases like such.
How You Can Avoid Missing Your SIP Payments
If you do not want to end up missing your SIP payments, here is what you can do:
• Keep track of your bank balance account. In case, your bank balance becomes low and you find it insufficient as per your SIP payment, try increasing the balance before the SIP due date arrives by depositing some amount to the bank account.
• If you know for a fact that you will not be able to pay the SIP payment due to an unavoidable financial obligation, you can go ahead and stop your SIP. Once you feel that your financial crunch is over, you can simply restart the payment. During the same, your earlier SIPs would continue growing if you do not redeem them.
• Pausing your SIP investment is also one of the options you can go with. Especially, if you are expecting heavy expenses as well as liquidity issues. Remember, any mutual fund houses will grant you the freedom to pause your SIP instalments for up to a certain number of instalments. The mutual fund house can also allow you to pause SIP instalments for up to a certain period after which they begin automatically. Keep in mind to check if the AMC provides the same option and pause your SIPs for a few months when you encounter a financial crunch.
Final Words
There is no need for you to be concerned if you have missed a few SIP instalments due to unavoidable circumstances. But, make sure you understand that this would not mean that you can miss out on paying many SIP instalments as it would end up affecting your corpus in a massive way.
It is highly advised to avoid missing the SIP instalment. Furthermore, cover up for the loss by making additional purchases in the scheme if you cannot avoid not missing your SIP payment.
Source: Insurancedekho
