Why You Must Not Stop a Mutual Fund SIP Once You Start It?

Why You Must Not Stop a Mutual Fund SIP Once You Start It?

mutual fund SIP

Starting on your way to financial stability and achieving life’s many goals needs an organised approach to investing. In the early stages of this process, the concept of a Systematic Investment Plan (SIP) in mutual funds develops as a responsible guiding principle. SIPs are more than investments; they are long-term commitments to achieving one’s goals. In the middle of life’s ever-changing currents, people sometimes consider discontinuing their SIPs.

The discussion that follows goes further into why it is critical to avoid terminating a mutual fund SIP after it has been established. SIPs represent the power of consistency, patience, and the wonder of compounding, in addition to the appeal of instant financial freedom. They are designed to create long-term wealth and are fundamentally connected to certain financial goals. As a result, putting an end to this financial process might have long-term effects that go well beyond the point of no return itself.

Below are the consequences of stopping your SIP too soon, the logical relationship between SIPs and long-term financial objectives, and the critical distinction between discontinuity and strategic change.

If you stop your mutual fund SIP, your calculations of wealth creation may change

When you start a Systematic Investment Plan (SIP) with mutual funds, you are starting on a well-structured path to create wealth over time. Every SIP instalment adds to the entire financial corpus, and the magic of compounding begins to work.

When you start a SIP, you are committed to investing a certain sum at regular times, often monthly. This constant commitment increases over time, and the power of compounding becomes harder to ignore. Compounding means that your returns give rise to new returns, similar to a thriving financial system in which your money grows and multiplies.

Early terminating your SIP causes some problems in this financial system. While the amount of money you’ve invested remains as is, the compounding process is stopped. The longer your SIP is active, the greater will be the effect of this change. As a result, your wealth growth estimates must be significantly modified.

The planned ultimate financial corpus may fall short, putting at risk your capacity to meet critical financial goals. Whether it is to support your child’s school, build your dream house, or secure a comfortable retirement, quitting your SIP may result in goals being postponed or compromised.

Resuming a SIP after a break could lead to a greater investment to compensate for lost time and compounding potential. Discontinuing an SIP might change the entire direction of your wealth accumulation, which could delay your progress towards your financial goals. It is not a decision to be taken lightly, since the costs of discontinuing the compounding process can be significant.

wealth creation

Mutual fund SIPs are usually mapped against long-term goals

Systematic Investment Plans (SIPs) are designed to correspond with significant, long-term financial goals. They are not designed for immediate, short-term gain, but instead rely on the fundamental concepts of consistency and time.

The fundamental principle driving SIPs is based on the idea that wealth-building is an evolutionary process that unfolds over years rather than months. These investment plans are designed for those who value patience and are ready to nurture their financial holdings over time.

These plans are most usually connected with big-ticket objectives like supporting a child’s education, achieving a financially secure retirement, or realising the dream of homeownership.

SIPs are built on the compounding principle, which states that returns on investments produce further returns. This mechanism develops at an increasing pace, resulting in a compounding effect that promotes the accumulation of wealth.

SIPs flourish on consistent, long-term commitment. The more you stick to your SIP, the stronger the compounding impact increases, changing your financial situation.

Discontinuing a mutual fund SIP and making changes are two different things

Discontinuing a mutual fund SIP

Within the context of mutual fund SIP investments, discontinuing a SIP and making changes are two different actions. When you opt to stop a SIP, you stop all regular payments to the fund, thereby closing the door on your investing strategy. Making a change to your SIP involves making changes to a specific part of the plan while keeping it active and continuing.

You can change the amount of your investment, the frequency of your contributions, or even move to a different mutual fund within the same fund company. This flexibility responds to changing financial situations and matches with shifting financial objectives.

The decision to cancel SIP results in the entire stoppage of the scheduled investment process, with no more contributions made. This point in time marks the end of your SIP’s ability to generate money, with the beneficial effects of compounding coming to a stop.


Ending a mutual fund SIP might have serious and long-term consequences for your financial future. SIPs are constructed for long-term wealth growth, making use of the benefits of stability and compounding. Instead of giving up, try making changes that are in line with changing circumstances.

It’s important to remember that the longer you have your SIP, the greater the compounding benefits that come with it. Restarting it later may need higher contributions, putting your finances under strain. As a result, maintaining a consistent commitment to SIPs is critical to achieving your long-term financial goals.

CA Mukesh Gupta
CA Mukesh Gupta
Mukesh Gupta is the founder and director of Wealthcare. He is Fellow chartered accountant, Certified Financial Planner and Certified Public Financial advisor. He is in financial services industry since 1994. He conducts free money management sessions for corporates and associations on topics related to Personal finance. His previous engagement was with Birla Sunlife group. He regularly writes on topics related to Personal finance and occasionally appear on electronic media.

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