How to Reduce Your SIP Amount: A Guide for Savvy Investors
Investing in mutual funds through Systematic Investment Plans (SIPs) is a popular strategy for building wealth over time. However, the truth is that fund houses do not allow you to reduce your monthly commitments midway in your existing SIPs. This can be a challenge if you need to adjust your financial allocations for various reasons. This guide will help you understand the process of reducing your SIP amount or temporarily halting your SIPs and then reinvesting with a lower amount.
Understanding the Limitations of Reducing SIP Amounts
The first thing to understand is that fund houses such as AMCs (Asset Management Companies) do not allow you to reduce your monthly SIP commitment while the plan is active. The simplest way to achieve a reduction is to stop your existing SIP and then restart one with a lower monthly amount. You can also increase your SIP amount using a top-up facility, but reducing your SIP amount is not possible without initially stopping your existing scheme.
Steps to Reduce Your SIP Amount
Step 1: Launch the Groww app and navigate to the mutual fund dashboard. Select 'SIPS' from the menu.
Step 2: View all your SIPs on Groww. Select the SIP that needs to be modified.
Step 3: In the bottom left corner of the next screen, select the 'Edit SIP' option.
If you want to re-invest with a lower amount, you have a few options. You can either stop your existing SIP, reinvest with the new surplus amount in your existing mutual fund (MF) scheme, or switch to a different MF scheme with a lower SIP amount. It is important to carefully evaluate your investment options and consider the impact on your overall investment portfolio.
Flexible SIP Options: A Silver Lining
Some AMCs now offer flexible SIP plans that allow you to increase and decrease your SIP amount as needed. If your AMC provides this service, it may be a convenient solution. However, remember that it's always a good idea to periodically review and adjust your investment strategies to align with your financial goals.
Alternative Strategies: Reducing Unnecessary Expenditure
If you find that reducing your SIP amount is not feasible, consider alternative strategies such as reducing unnecessary expenditure. Remember, every penny saved today can contribute to a better financial future. Focus on investing in good instruments and reaping the benefits of your long-term investments.
Typically, you can only withdraw a partial amount from your SIP single investment plan through the online process. Therefore, if you need to reduce your SIP amount, the best approach is to stop the current SIP and start a new one with the reduced amount. This requires you to contact the AMC and ask them to halt the current SIP.
For those looking to get their SIPs stopped, it's important to know that the process can take 3-4 weeks. Some AMCs may require you to send an SIP cancellation form first. If you are not particular about the SIP date, you can send a fresh SIP registration form for a lower amount in a week after the cancellation, ensuring that the new SIP starts only after the old one is fully ceased.
Conclusion: Maintaining Balance in Your Investment Strategy
Reassessing your SIP amount is a wise decision if your financial situation changes. While reducing your SIP amount can be challenging, it is important to do so strategically. By understanding the limitations and exploring alternative strategies, you can maintain a balanced and effective investment plan.