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When To Stop SIP And Exit Mutual Fund? Research Team | Posted On Wednesday, April 25,2018, 07:21 PM

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When To Stop SIP And Exit Mutual Fund?



You must be well familiar with the Systematic Investment Plan, popularly called SIPs. SIPs are not an investment, but a way of investing in mutual funds. What are SIPs? Systematic Investment Plan popularly called SIPs, allows you to invest small amounts regularly, say once each day, month or fortnight in a mutual fund. You can start a SIP with just Rs 500 a month.

Now to the big question. When to stop SIPs and exit the mutual fund? Want to know more on mutual fund? We at will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

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When To Stop SIP And Exit Mutual Fund?

Mutual Fund is a consistent underperformer

An investment in equity mutual funds are for the long-term. What if your mutual fund has not performed well, in the last quarter? Should you terminate the SIP? No, definitely not. Stay invested in the mutual fund for at least 2 years. Keep comparing the performance of the mutual fund with a benchmark (BSE Sensex or Nifty) or competing mutual funds. If the mutual fund continues to underperform, stop SIPs and exit.

A mutual fund which has underperformed for this long a period, will rarely bounce back.

SEE ALSO: Mutual Funds: Should You Invest In NFO?

The mutual fund objective differs from your financial goals

You have invested in an equity diversified mutual fund to protect your investment. This fund has decided to merge with a banking fund to increase profitability. Your mutual fund invests a lot in banking stocks. Its decision making time. Should you continue SIPs or exit the mutual fund?

You had invested in this mutual fund because you wanted to safeguard yourself from risk in investment. This mutual fund investing a lot of money in banking stocks, does not meet your objective. If you are not comfortable with the risk, exit the mutual fund.

SEE ALSO: How To Choose Your Mutual Fund Portfolio?

You are not comfortable with the new management

Many a time fund houses could merge with bigger domestic funds. Fund houses like Morgan Stanley, J P Morgan, Fidelity and so on, have merged with much larger domestic funds. What does this mean? A change in management means new fund managers, CEOs, CIOs and so on. If you are not comfortable with the new management, stop SIPs and exit the mutual fund.

SIP related financial goals have been met

You have started SIPs in mutual funds with financial goals in mind. Let’s say you want to buy a car, 3 years from now. You invest in mutual funds via SIPs to meet this financial goal. Once the financial goal is met, SIPs can be discontinued and you may exit the mutual fund. You can set new financial goals and allocate fresh money via SIPs in mutual funds, to achieve these goals.

What do you learn from this article? Never terminate SIPs in a hurry. It could be a costly mistake. Be Wise, Get Rich.

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