Can SIP amount be withdrawn anytime?
You can withdraw your investments periodically unless they are under the lock-in period. You can withdraw via SWP (systematic withdrawal plan) route by redeeming a fixed amount at a given frequency. You may withdraw a lumpsum amount via a redemption request as and when required.
Investment horizon
Generally, consider SIPs with a minimum investment of five years or so. Empirically also it takes at least five years to average out the losses and market risks and the power of compounding acting in the back. A market correction phase does not mean a need to redeem those funds.
In case you partially withdraw from the SIP corpus, only the exit load may apply. Normally the exit loads are 1-1.50% of applicable NAV, if you withdraw with 12-18 months. Beyond that, ideally, there will be no exit loads.
SIP is an easy and convenient mode of investing in Mutual Funds and not a contractual Obligation. There are no penalty or charges even if you miss an installment or two. At most, the fund house would stop the SIP, which means further installments would not get debited from your bank account.
The lock-in period applies to all your investments in ELSS. This becomes tricky when it comes to the SIP investments. Every monthly investments come with a lock-in period of three years. This means only your first monthly SIP would complete the lock-in period exactly after three years or 36 months.
Closing or cancelling your SIP means that you will be claiming all the units that you hold and discontinuing the SIP. You can choose to do this if you feel like the fund isn't working for you or if you want to invest in other instruments. To cancel your SIP, filing a stop request is necessary.
Existing investment will continue to earn returns
Investments done so far via SIP in the mutual fund scheme, will continue to remain invested even after you request to stop your SIP. The existing investment in the scheme will continue to earn returns.
The majority of mutual funds are liquid investments, which means they can be withdrawn at any time. Some funds, on the other hand, have a lock-in term. The Equity Linked Savings Scheme (ELSS), which has a 3-year maturity period, is one such scheme.
You will have to select the Pause SIP option and you could pause your SIPs for a minimum period of one month to a maximum period of six months. Some AMCs allow you to pause SIPs for a maximum of three months.
Loan Amount
Many banks specify the minimum and maximum amount you can borrow against your mutual funds. However, the loan limits vary from bank to bank. Usually, you can procure loans up to 50% of the value of pledged equity fund units and 70%- 80% of the value of pledged debt fund units.
How do I get out of SIP?
The investor will have to submit a written request with the bank to cancel the SIP which is known as the NACH mandate. Once the Stop SIP instruction is given to the bank and no amount is debited to the account for two months the SIP will be terminated by the AMC.
| Fund Name | 1 Yr CAGR | Expense Ratio |
|---|---|---|
| ICICI Prudential Liquid Fund | 3.40% | 0.29 |
| Aditya Birla Sun Life Savings Fund | 3.70% | 0.49 |
| Aditya Birla Sun Life Money Manager Fund | 3.60% | 0.33 |
| HDFC Overnight Fund | 3.30% | 0.2 |
If you miss an installment, mutual fund doesn't deduct any charges but they will still raise the request to your bank. If you don't have sufficient funds at that point, your bank will consider it like cheque dishonored and charges you for it.
Its much simpler. "You can stop an SIP simply by going to 'My SIP' and clicking in 'Cancel'. After that, if you want to withdraw your money, go to 'My investments' and click on 'Redeem'.
At the end of the term, you have an option to renew the SIP of your MF schemes to ensure continuity. You usually get a reminder from the AMC to renew your SIP. You can decide whether to renew your SIP or not based on the returns of the scheme during the SIP tenure.
The majority of mutual funds are liquid investments, which means they can be withdrawn at any time. Some funds, on the other hand, have a lock-in term. The Equity Linked Savings Scheme (ELSS), which has a 3-year maturity period, is one such scheme.
Existing investment will continue to earn returns
Investments done so far via SIP in the mutual fund scheme, will continue to remain invested even after you request to stop your SIP. The existing investment in the scheme will continue to earn returns. Stopping an SIP does not mean withdrawal from the scheme.
