Missed Your SIP Payment? Here's The Solution

Have you missed your SIP (systematic investment plan) installment and don't know what to do next? Let's try to understand it. Udayan Adhye is a well-known finance influencer, whose guidance is always helpful for individuals. His worthy knowledge of finance makes his views stable enough to make crucial decisions. Here Udayan Adhye again comes with very common yet important information on SIP installment. 

So, Here a Big Question Arises, what happens if You Miss Your SIP Installment? 

First of all,missing an SIP installment generally happens due to an insufficient balance in your bank account. There are no severe consequences to this and the AMC or broker does not charge you for the same.

Penalty: When you set up a SIP, you allow the Electronic Clearance service (ECS) and National Automated Clearing House (NACH) with the bank to auto-debit a fixed amount on a specific date. Every month on the day of the SIP installment, the Asset Management Company (AMC) sends a request to the bank, and the bank, on your behalf, pays the SIP installment from your account. If you don't have enough balance, the bank rejects the request from the AMC. The AMC doesn't charge any penalty for a missed SIP, but the bank does. Your bank charges a penalty in the range of Rs 100-750 for every missed SIP for not maintaining sufficient balance in the account.

Cancellation of SIP: If you miss three consecutive SIP installments, then the AMC will automatically cancel your SIP. The existing investments will not be disturbed and will keep earning returns for you, but no additional investment will go through from your account. In case you want to restart the SIP, then you will have to start over the entire SIP process and set up an auto-debit again.

Here are Some Suggestions to Avoid Penalties on SIP

It is possible to avoid penalties on SIP by simply maintaining the minimum balance in your account. Make sure you maintain the required balance in your account on the date of SIP. You can set up the SIP date a day or two after you receive your paycheque, so you never miss the SIP installment.

Alternatively, you can pause the SIP if you don't have the required balance. All AMCs and mutual fund platforms have the facility to pause your SIP. This way, the AMC will not send a request to the bank on the date of SIP, and you don't have to worry about the penalty if you don't have enough balance. You can restart the SIP whenever you want without any hassle.

But what if you forget to restart your SIP or don't receive your salary on time? You are missing out on your investments, and you end up paying the penalty for your missed installments. Investing is supposed to be simple and hassle-free, and not filled with penalties.

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By following these steps you can take a smart and convenient move on SIP installment. And after knowing about all the details on SIP you can tackle all the coming difficulties regarding SIP funds.