SIP amount

Can you change your SIP amount every month?

Systematic Investment Plans or SIPs are one of the most popular and disciplined ways of investing in mutual funds. It allows the investor to invest a fixed amount at regular intervals, usually every month, thereby averaging out the cost of units over time. This offers a simple route to building wealth, but most investors are concerned about the flexibility they offer. In this blog, we’ll look into the flexibility of SIPs, whether one can change the SIP amount, and what advantages come with this practice. This disciplined process will help you create wealth step by step and enjoy rupee-cost averaging.

Can you change the SIP Amount?

Yes, and it is possible to change the amount every month, but it depends on the platform or house mutual fund you are using. Normally, you can change your SIP amount in following ways:

Increase in SIP Amount:

You can add more SIPs if you start earning more money or to ride the wave when the market conditions are favourable. A higher amount will naturally boost your investment growth. The majority of websites will allow you to increase your SIP amount anytime without any charge, but only if it suits your overall goals.

Reduction in SIP Amount:

If there is a change in your financial condition, you may want to reduce contribution to your SIP account due to personal or economic reasons. You can reduce the amount by requesting a decrease in the same. This way, you’ll be able to reduce the commitment without stopping SIP altogether.

Temporary Suspension or Pause:

If an investor wants to go for a very short break because of emergencies, any other financial obligation, or the reason is that in case of short-term cash-flow issues, SIP pause is there for a month or two; some mutual fund houses provide with this facility and it helps temporarily, and further investment can continue when the time gets better again.

Switch from one fund to another:

Another advantage of SIP is the option to switch funds. In fact, most investors take full benefit of this option by switching from one fund to another within the same mutual fund family, as and when the fund’s performance changes or the investor’s investment strategy changes.

SIP amount

Advantages of Changing SIP Amount:

Adaptation to Shifting Financial Needs:

Life is full of ups and downs; so are your financial needs. SIP can be easily altered as your income, expense, or any financial need keeps changing. The SIP can either be increased when there’s a surplus, or decreased in times of need. This keeps you invested at the same time and does not let you be overwhelmed by too many funds.

Optimizing the investment strategy:

The more mature your financial goals are, the better would be your opportunity to change how much you want to invest into the mutual funds, depending on those goals. You might want to increase SIP when you earn more significant incomes because your goal would be to accomplish some long-term objectives, such as retirement.

Advantage in the market conditions:

Sometimes investors choose to hike up their SIP amount if they feel the market is undervalued or during a correction. The SIP facilitates the taking advantage of market volatilities when an individual can invest more in the scheme at the falling prices of units.

Rupee Cost Averaging:

Through SIP contributions adjusted according to the market situation, you make the most of rupee cost averaging, that is, when you invest more in a decline in the market and less when the market goes up. In turn, you are likely to reap better returns in the long term.

Conclusion

Though SIPs are synonymous with a monthly fixed contribution, it is also pretty flexible to investors. You can change your SIP amount every month, increase or decrease it based on your financial situation, or even pause it temporarily. This flexibility allows investors to stay committed to their financial goals without feeling restricted by a rigid structure. It’s essential to review your investment strategy regularly and adjust your amounts as needed to align with your changing life circumstances and long-term financial objectives.

FAQs

Are there any restrictions on the change of SIP amount?
You can typically change your SIP amount, though some mutual funds or platforms might have certain conditions. For example, you might be required to meet a minimum SIP amount requirement once you make the change. The frequency at which you can adjust your SIP amount may vary between fund houses, but in general, SIPs are quite flexible.

How often can I modify the SIP amount?
You can change your SIP amount any number of times, although some mutual fund providers have a set of guidelines or processing time for such alterations.

Can I cancel my SIP and start a new one with a different amount?
Yes, you can cancel the existing SIP and start a new one with a different amount. However, this may require that you go through the mutual fund provider or the platform where you have the account to cancel the existing SIP and set up the new SIP.

Will changing the SIP amount affect my tax benefits?
This would not affect the tax benefits that you are currently enjoying, so long as your total annual investment is within the limit for saving tax through tax-saving schemes such as ELSS. So, so long as your annual contribution does not exceed ₹1.5 lakh under Section 80C, you will continue to enjoy the tax benefits.

Can I change the SIP amount for a lump sum investment as well?
No, the SIP amount in the case of a lump sum is not adjustable. SIP is actually a regular, consistent contribution but in a lump sum investment, it is a one-time full investment. If you want to change the investment amount, you would either need to alter the SIP or make a new lump sum investment as a separate investment. You can easily start a SIP or lumpsum investment with a certified mutual fund distributor like VSRK Capital.