SIP investment is recommended due to its dual advantage of compounding returns as well as rupee cost averaging that offers more number of units when the market is trading higher and vice-versa. And when it demands, you to service a regular payment towards the scheme for the pre-decided term unfalteringly, there is a provisions in case of the scheme that allows an investor to pay the payments for quite some time in case he feels his inefficiency to tender the same.
How to pause investment in SIP?
The SIP investment can be paused by providing a letter in respect of the same to the fund house and it has to be furnished a month in advance. This is because every time an investor engages in a SIP investment, the fund house registers a mandate with the bank and enables the bank to debit the account on the SIP date. And if you place a request for pausing the SIP, the bank will not automatically debit the amount due towards the SIP and transfer to the fund house.
How many SIPs you can pause?
This totally is at the discretion of the fund house, but in a more general case, an investor can stop at the most 6 instlments to be serviced towards the SIP.
Also, some of the fund houses do not encourage this step to a great deal as then investors will then unnecessarily resort to such a practise and deviate from the real objective of starting with a SIP investment.
Stopping vs pausing SIP
Stopping is totally ending the investment or in a case when you default on SIP payments, the fund house will automatically stop the scheme in case of continuous default for 3-5 months.