Managing your investments through a Systematic Investment Plan (SIP) is quite a journey. It demands careful planning and a deep understanding of your financial objectives, not just in the beginning but also while redeeming your investment. As you inch closer to realising your financial targets, it is essential to start planning your SIP withdrawals. Find out how to withdraw the SIP amount in this article.
What is an SIP, and is it the same as mutual funds?
A Systematic Investment Plan (SIP) is a disciplined way to invest regularly in mutual funds. In an SIP, a fixed amount is deducted from your bank account and invested in a chosen fund at regular intervals. It is not a type of fund but a method of investing. SIP allows rupee cost averaging and is ideal for long-term wealth creation.
An SIP involves investing a fixed amount of money at regular intervals into a mutual fund scheme of your choice. It is important to note that a mutual fund is an investment product, while an SIP is the method of investing in mutual funds.
SIPs provide you with convenience, ease, and discipline. They utilise the principles of rupee cost averaging. By consistently investing a fixed amount at regular intervals, SIPs allow you to purchase more units when prices are low and fewer units when prices are high. As your investments grow, the power of compounding further multiplies your wealth.
Once you have reached your target, withdrawing your SIP is straightforward. You can redeem your investments based on your needs and use the money for the intended purpose.
Process of withdrawing the SIP amount
The SIP withdrawal process is flexible—you can withdraw partially or fully at any time, subject to fund rules. To start the sip withdrawal, log into the fund house’s website, mobile app, or your investment platform. Select the scheme, enter the amount or units to redeem, and confirm. The how to withdraw sip amount steps are designed to be simple for investors.
You have two options to redeem your SIPs: offline and online. Moreover, you can do it through any of the below mentioned mediums:
Through a broker or distributor:
If you invested in mutual funds through a broker, you need to share your folio number and scheme details with the concerned party. They will provide the necessary forms and guide you through a smooth withdrawal process. Generally speaking, you will have to fill out a redemption request form with your name, folio number, scheme name, plan details, and the amount or number of units you want to redeem. After processing, the redemption amount will be credited to your bank account.
Through a trading and Demat account:
You can access your trading and Demat account, locate your mutual fund holdings, and follow the platform's instructions to withdraw a specific SIP. The funds will then be transferred to your bank account.
Through the Asset Management Company (AMC):
Connect with the AMC through their website or helpline number and share your investment details. You must complete an online or offline form with the specified SIP withdrawal amount and initiate the process.
With Registrar and Transfer Agents (RTAs):
Contact your fund's RTA for help and provide investment specifics of your fund holdings. They will guide you through the steps and provide the necessary forms for withdrawal.
While the process of redemption is quick and simple, the decision to redeem your money requires some time and consideration.
Factors to consider while withdrawing your SIP amount
Before initiating a sip withdrawal, keep these factors in mind:
- Current market conditions – avoid withdrawing in a downturn
- Investment goals – ensure you’re not disrupting long-term plans
- Exit load – check if charges apply to recent SIPs
- Taxation – short-term capital gains may apply
- Sip withdrawal time– usually 1–3 working days to receive funds
A thoughtful approach ensures better outcomes and tax efficiency
Lock-in period:
Equity Linked Savings Scheme (ELSS) is a tax-saving mutual fund that has a lock-in period of three years. If you plan to redeem your ELSS funds, you must wait for at least three years from the investment date. This three-year period applies to every SIP instalment separately.
Tax implications:
You must be aware of the tax implications for diffrent mutual fund schemes. For equity funds, if you redeem within one year, you will be taxed at 15% for short-term gains. If you redeem after one year, there is no tax on long-term gains of up to Rs 1 lakh in a financial year. Gains exceeding this limit are taxed at 10%. For debt funds, all gains from funds with 35% or less of their assets in equities are added to your taxable income and taxed according to your income tax slab.
Exit load:
Some mutual fund schemes have an exit load, a fee you pay to withdraw your funds early. This can differ for different schemes. It is important to check the fund's terms to understand this better.
How Do You Withdraw Money From Mutual Funds Online?
Here’s how to withdraw money from SIP online in a few easy steps:
- Log into your AMC or broker platform
- Navigate to your mutual fund investments
- Select the fund from which you want to redeem
- Enter units or amount for sip withdrawal
- Confirm with OTP or password
The sip withdrawal time typically ranges from 1 to 3 working days depending on the fund type.
Using SWP Instead Of Lump‑Sum Withdrawal
Instead of withdrawing everything at once, consider using a SWP (Systematic Withdrawal Plan). This allows you to withdraw a fixed amount regularly from your mutual fund. A SWP offers benefits such as steady cash flow, reduced tax outgo, and lower exposure to market timing risks. Use a SWP calculator to plan the ideal withdrawal schedule and optimise tax efficiency.
Can I Stop SIP Without Withdrawal?
Yes, you can stop your SIP without redeeming the invested amount. Stopping the SIP simply halts future instalments, while your current investments continue to stay invested as per fund performance. This gives you the flexibility to pause contributions without triggering any sip withdrawal or affecting long-term returns.
Is Exit Load On Each SIP Instalment?
Yes, exit load applies to each SIP instalment separately based on its individual investment date. For instance, if the scheme has a one-year exit load, each instalment must be held for 12 months to avoid sip withdrawal charges. Review the fund’s terms to understand sip withdrawal rules better.
How Long Does It Take To Withdraw Money From SIP?
The sip withdrawal time generally ranges from 1 to 3 working days. Equity mutual funds take 2–3 working days, while liquid or overnight funds may process sip withdrawal within 24 hours. Weekends and bank holidays may delay the credit of funds, so plan redemptions accordingly.
What Happens If I Cancel SIP?
If you cancel your SIP, future investments will stop, but the units already accumulated will remain in your account. These can be withdrawn at your convenience following the standard sip withdrawal process. Cancelling an SIP has no impact on existing investments unless you also initiate a how to withdraw sip amount request.
Conclusion
The process to withdraw your SIP is quite straightforward and quick. However, you must be careful of the timing and weigh the pros and cons of redeeming your funds. Also, make sure your financial planning aligns with your goals.
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MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS. READ ALL SCHEME RELATED DOCUMENTS CAREFULLY
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MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
