SIP Stoppage - Reasons & the Response

Systematic Investment Plans (SIPs), today, are one of the most popular ways to invest in mutual funds. It is often used for making recurring investments in mutual fund schemes for a predetermined amount. By making disciplined SIP investments over the long-term, and taking advantage of rupee-cost averaging, an investor can accumulate significant wealth and achieve his financial objectives. However, it is also observed that people often have faith in their SIP investments. We also see a good number of investors stopping their SIPs well before time, due to multiple reasons.

According to data from the Association of Mutual Funds in India (AMFI), for April & May months of this year, the SIP number or SIP accounts closed or stopped stood at 27.40 lakh as against 44.26 lakh of new SIP accounts opened. To put it as a ratio, out of 100 SIP accounts, on an average more than 2 accounts are being closed every month and this has increased in recent times. The data also indicates a sizable number of people discontinuing their SIPs in a relatively shorter period of time too.

Let us now try to understand as to what can be the reasons in general for SIP stoppages and the argument in response for rejecting these reasons as well.