SIP Pause: SIP will not stop even if there is a shortage of money, the pause facility will help you reach your goal.

What is SIP Pause Facility in Mutual Fund : In today’s era, an effective way to invest for long term is Systematic Investment Plan (SIP). SIP is a way to create wealth in the long term, where instead of blocking funds at one go, you get the facility to invest small amounts every month. If regular investments are made in a disciplined manner through SIP, a large corpus can be created in the long run. But in some cases it may also happen that there may be a sudden financial crisis. It can be said that the circumstances change suddenly and the amount for SIP cannot be arranged. For these circumstances, mutual fund houses provide the facility of ‘SIP pause’.

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What is ‘Pause’ facility in SIP?

SIP Pause is a facility in which if you suddenly face a financial crisis, then instead of stopping the SIP, you get the facility to stop it for a few days. Earlier this facility was for 1 to 3 months, but now some fund houses have extended it to 6 months. If you take the option of ‘pause’ SIP for 6 months, then after 6 months the SIP amount will automatically start getting deducted from your account. No additional interest will have to be paid on this. This means that your SIP will not stop; to achieve your goal, you extend it for another 6 months.

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When can you choose SIP pause option?

Financial Crisis: During challenging times, such as a medical emergency, job loss, or some sudden unexpected expenses, a SIP pause can provide you financial relief. The money saved can be used for more important matters.

Career Change: Many times during a career change, one has to change jobs, or one plans to take a few months’ rest from the job and pursue higher education, or there may be a plan to start a new business, due to which expenses increase. In these conditions too, one can opt for SIP pause.

Personal Requirements: When expenses suddenly increase on marriage, buying a house or any other family related event, then SIP pause can definitely provide some financial relief for a few months.

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What needs to be done to avail the facility?

If you also want to avail the facility of SIP ‘Pause’, then you can give this information to the Asset Management Company i.e. AMC through mail. You will have to submit a ‘pause’ request according to how many days your company provides pause facility. That means, if the company is providing this facility for 1 to 6 months, then you can pause SIP for at least 1 month and maximum 6 months only. You will have to provide information about your folio number in the mail. After which the company will provide you this facility. SIP will be released after the ‘pause’ period is over.

Fixed Income Fund: Is the income, profit and risk fixed in these schemes? Invest money after checking them.

It is not wise to stop investing

If any kind of financial problem arises and you feel that things will improve in future, then you should not stop SIP. Instead, you can avail the facility of SIP pause. This does not affect your investment objective. An example of this is the period of Covid 19, when many people faced financial crisis. During that time, those who took this facility and later started SIP, got tremendous benefits. Because when the market recovery started after Covid 19, it lasted for a very long time.