Are you Missing SIP? It Could Cost You Money

Do you know what happens when you miss a SIP? If the answer is no, don’t worry, we have you covered.

This article briefly explains what happens when an individual misses a SIP, covering the following points:

• What is a SIP?

• What should you know about a SIP?

• What happens if you miss a SIP?

Also Read: Final Expense Life Insurance

What Is A SIP?

SIP stands for Systematic Investment Plan. It is an investment plan in which an individual can invest by paying in installments. Instead of paying a lump sum amount, SIP allows the investor to pay a fixed amount at regular intervals. The amount can be as small as 500 rupees per month. It is a way of investment offered by Mutual Funds. It has started to gain popularity as it reduces the risk of market volatility and is a disciplined way of investing. 

SIPs are a good option when one is looking for long-term investments. However, when going for a long-term investment, one must ensure that investing early and consistently is the key. 

Also Read: Investor First Process

What Should You Know About A SIP?

Before an individual goes for SIP, they must know a few things about SIP Investments. Here is everything one must know about SIPs before going for them:

1. There is a misconception that one cannot stop a SIP, just like Fixed Deposits and Recurring Deposits. However, it is not the case. An individual can stop a SIP whenever they want to. 

2. One should always go for SIPs, depending on their needs. If an individual wants to avoid risks, they should go for low-risk SIPs and respectively. 

3. The audience often confuses the terms SIP and Mutual Funds. The two terms may seem similar, but they are not the same. A SIP is a way of investing in Mutual Funds. 

4. Considering the disciplined and security from market volatility provided by the SIPs, they can be a good option for long-term investments.

5. Starting a SIP is easy and can be done online.

6. Increasing or decreasing the SIP amount is a complicated process hence, most people go for opening a new SIP as a selected option. 

Also Read: Final Expense Life Insurance

What Happens If You Miss A SIP?

If an individual misses a SIP payment, the Mutual Funds do not charge any penalty to the investor. However, the bank may charge a penalty if the individual has insufficient funds or misses the auto-debit payment. Missing a SIP payment could cost you 250 INR to 750 INR.

If the individual fails to make the SIP payment for three consecutive installments, only then do the Mutual Funds get canceled.

A SIP is a way of investing in Mutual Funds. In this investment practice, an individual pays a fixed amount regularly. The amount can be as small as 500 rupees per month. SIPs are gaining more popularity these days due to the discipline and safety they provide. However, missing a SIP payment may lead the bank to deduct a penalty from your account for missing the auto-debit payment. If you fail to make the SIP payment for three consecutive installments, it may lead to the cancellation of your Mutual Fund.