SIP i.e. Systematic Investment Plan in mutual funds has become very popular among investors these days. A good fund can be prepared in the long term by investing a little amount every month. The biggest feature of SIP is that you can invest regularly in both equity and date funds. But many times such situations come when people decide to shut down the SIP. So if you are thinking of shutting down your SIP, then stop a little. It is very important to understand some important aspects before closing the SIP in the middle. It should not happen that a wrong decision spoils your future financial goals.
When is the right time to shut down SIP?
If any of your major financial goals have been met, such as a child’s education, buying a house or retirement planning, then this may be the right time to shut down SIP. But if your goals are still incomplete, then it will be prudent to continue SIP. Remember, SIP is a long -term investment and stopping it may delay to reach your financial goal.
Is your fund performing well?
Be careful if your fund is constantly performing less than your peers! But once compare the fund with the entire market. Is this just a short -term decline? Always decide from a long -term perspective. Sometimes the performance of the fund may fall temporarily due to market fluctuations, but good funds come back on track over a long period.
Mix it with your needs
Sometimes the fund house changes the purpose of its scheme to earn more profits. If that new purpose does not match your personal goals, it would be better to get out of SIP. Your investment should always be in line with your financial goals.
Will stopping SIP increase the risk in portfolio?
Will closing SIP increase the dominance of any one sector or asset class in your portfolio? That is, it may happen that there are more investments of the same type, which will increase the risk. It is important to always keep the portfolio diversified. Be sure to assess your entire investment portfolio before closing the SIP.
Understand the long -term trends of the market
Sometimes the geophysical upheaval (eg international tariffs, war) in the market may decline in SIP funds! In such a situation, it is not prudent to stop the investment and stop the investment. Maybe in a few months the fund comes back on track. Be patient and try to understand the long -term trends of the market.
Stop SIP if necessary, but do not stop it
If your problem is lack of cash, stop the SIP for a few months instead of completely shutting down. When the situation improves, start again. SIP is a long -term commitment, leaving it due to a small problem can damage your financial future. Before making any decision, analyze your needs, market trends and fund performance deeply.
