SIPs Are All About Simplicity

A mutual fund Systematic Investment Plan or SIP is becoming highly popular among investors to grow their money and build up their wealth for the future. It allows you to invest regularly in your favorite mutual fund schemes and beat market volatility. But, a lot of people fail to understand that SIP is a long-term commitment that cannot be broken in a blink of an eye. What happens if you do not have enough money in your bank account to pay SIP in a particular month? Will you end up paying extra charges or would the bank or fund house be kind enough to help you in such situation?

What happens if you fail to pay mutual fund SIP?

There are two ways to look at it. He said that first of all, you will be fined by the bank. The amount is usually on the higher side and can go up to Rs 600. "This is the financial loss you will be burdened with. It is important to keep in mind that the fine is levied every month. So, if you don't pay the SIP for three months, you might end up paying Rs 1800. Also, GST will be levied on it.

The other problem is that the bank could actually cancel your investment.  

If you fail to pay the SIP for two to three months, the bank might cancel it as well. In this case, you will have to either go to the AMC and restart your SIP or start investing in a new scheme. Most importantly, it defies your purpose. The only reason to start SIP is that you can invest regularly in a fund and grow your money. But, if you fail to pay the SIP, you are clearly not doing that. This can harm you in the long term.