SIP means Systematic Investment Generally all financial planners advise to start a plan. This has also had an impact. The number of investors investing in Mutual Funds through SIP has reached several crores. Perhaps, you would also be among those people who might have got advice from someone to start SIP but has anyone told you when to pause or stop SIP? Today we are telling you when SIP should be stopped and when it should be started again. What are its benefits?
What is the strategy of sip pause?
SIP pause is a strategy that allows investors to temporarily pause their SIP contributions without stopping the investment completely. It is important to understand that SIP pause involves stopping the SIP for a short period of time. This period can range from several months to a year depending on the policies of the mutual fund company. During this pause, investors are not obliged to make any additional contributions to their SIP. This temporary termination can be especially beneficial when a person faces a financial crisis.
Under what circumstances is it beneficial to do ‘Sip Pause’?
- Financial Crisis: In times of medical emergency, unemployment or any other major expenses, stopping SIP is the right decision. This temporary stop helps reduce the financial burden on you.
- Career change: When changing jobs, businesses or pursuing further education, individuals may face fluctuations in income. Pausing SIPs can help adapt to these changes as well as maintain long-term investment objectives.
- Important events: Major life milestones such as a wedding, the birth of a child or buying a home often require significant financial outlay. Stopping SIP can help in managing these financial demands effectively.
