A systematic Investment Plan (SIP) is a disciplined investment approach that enables individuals to invest in mutual funds periodically and regularly. SIP instalments offer several benefits that make them an attractive investment option for individuals looking to create long-term wealth.

However, investors often wonder what happens if SIP is missed, or will one or two missed instalments make any impact, and the answer to that is yes!

Missing a SIP instalment can affect an investor's long-term financial goals. It can result in missed opportunities for wealth creation, as well as lead to a loss of the benefits associated with compounding and rupee cost averaging. Investors must ensure that they do not miss any SIP instalments to reap the maximum benefits of this investment option.

What happens if you miss out on your SIP instalment?

Here are some possible consequences an investor will face if a SIP instalment is missed:

• The investment may be cancelled if the investor fails to pay the SIP amount for a specified period of time.
• Some fund houses may charge a penalty fee or a late payment fee for missing an instalment.
• Missing an instalment can lead to a break in the investment plan, potentially impacting the investment returns.
• The investment may also be paused until the missed instalment is paid, which can affect the investment's growth and compounding benefits.
• The credit score of the investor may be affected if the instalment is not paid on time, which can have broader implications on future loan applications and financial transactions.

To avoid missing an instalment, investors can set up an auto-debit facility that automatically deducts the SIP amount from their bank account on a specified date.

Steps on how to pay your missed SIP instalment

To start a SIP, you must first set up an automated technique, such as post-dated checks or electronic debit from bank accounts. This can be accomplished via a direct debit facility or NACH. Setting up a SIP saves investors the headache of filling out a new form every month or deciding which programme to invest in. With a sufficient amount in the bank account, the SIP can be set up for six months or more.

In case you miss two or three consecutive SIP instalments, here’s how to pay missed SIP instalments-

• The fund house may discontinue depositing post-dated checks or debiting your account. However, there will be no penalty or forfeiture for late payments.
• Once you have a sufficient amount, you may simply resume your SIP at any moment in the same account.
• It is important to note that missing SIP instalments can lead to a disruption in the investment plan and may impact the overall returns.
• Therefore, it is advisable to ensure that your account has a sufficient balance and set up automatic payments through electronic debits to avoid missing any instalments.

Missing an instalment may lead to the discontinuation of the SIP and cause the investor to miss out on potential gains. Restarting the SIP will help you continue your investment journey without any further hassle or penalty.

Conclusion

It is crucial never to miss a SIP instalment as it is a long-term investment strategy that helps investors to achieve their financial goals. Missing an instalment can interrupt the regular investment pattern and may result in lower returns due to the loss of the compounding effect.

Regularly investing in SIPs also helps to inculcate financial discipline and ensures that investors stay on track to achieve their long-term financial objectives.

There are many platforms out there that can help you achieve your long-term investment goals, like Fi Money. Mutual Fund investments on Fi are commission-free. With its intuitive user interface, suited for novice & seasoned investors, you can select from over 800 direct Mutual Funds. Plus, Fi's 100% secure as it functions under the guidance of epiFi Wealth, a SEBI-registered investment advisor.

To help simplify the steps involved, you can invest daily, weekly, or monthly via automatic payments or SIPs — created with one screen tap. Moreover, Fi offers 100% flexibility with zero penalties for missed payments.

Frequently Asked Questions

1. Can I pay missed SIP instalment?

A missed SIP instalment can occur if your bank account balance is insufficient during the deduction or if your SIP is not linked to AutoPay. However, you can make a one-time investment of the same amount in the same mutual fund for the current month.

2. What happens if I miss my SIP instalment?

Missing a SIP instalment may result in penalties or discontinuation of the plan. You can contact your fund house or financial advisor for payment options and further guidance.