Mutual funds now allow you to invest in small amounts through SIP mode. However, many fear investing via SIP, as they think missing a SIP installment might lead to account deactivation, making investors lose all their investment money.
It’s time to de-bunk the myth. The fact is; investor’s account does not close even if he/she missed one or two SIP installment. Neither are they penalized by the fund houses. In this case, the investor may be penalized by the bank for ECS (Electronic Clearing Service) rejection. The investor might be charged from Rs.150 to Rs. 750, where the charge varies from bank to bank.
However, before investing in SIP funds, investor must know that “if he/she fails to furnish installments for 3 consecutive times, it is considered that investor is not willing to invest further and the fund account is liable to deactivation.”