A systematic Investing Plan (SIP) is a feature offered by mutual funds so that you can invest systematically over a period of time. Through SIP, you can invest a certain amount every month. This amount is directly auto-debited from your bank on a specific date chosen by you. But what happens when there is not enough balance in your account? Read to find out the consequences of missing a SIP installment and how to escape a mutual fund penalty.
If you don’t maintain sufficient balance in your account on the date of the SIP, you will miss an instalment. Following are the consequences of missing a 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 instalment.
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. Hence, we at Jupiter money introduced no penalty SIP.
No penalty SIP is a feature introduced by Jupiter Money, where you don’t have to pay the penalty for your skipped SIPs. Jupiter Money automatically skips the SIP in case the balance is low in your account. All you have to do is set up a SIP with Jupiter, which will handle your investments.
Yes, there is a penalty for skipping your SIP. In case there is no sufficient balance in your account on the day of investment, then your investment won’t go through. Additionally, banks charge a penalty of Rs 250-750 for every missed SIP.
Yes, you can redeem your SIP investment any time you want. However, it is best if you stay invested in the fund until you reach your goal. But, if the fund is underperforming, or you require money urgently, then you can redeem your mutual fund investment and get the money within 3-4 working days.
The fund house doesn’t charge a penalty if the SIP bounces. However, your bank charges a penalty of Rs 250-750 if you miss your SIP instalment due to insufficient balance.
If you skip a SIP due to insufficient balance, you can miss at most three consecutive SIPs. If you skip the fourth SIP, then your SIP will be canceled. But if you pause your SIP, you can restart it whenever you want.