If you’re investing through a Systematic Investment Plan (SIP), missing even three consecutive installments might seem like a small hiccup — but it can have serious long-term consequences. Whether you’re a new investor or a seasoned professional, understanding why consistency matters in SIPs is critical to protecting your financial future.
Miss 3 Consecutive Installments of SIP
| Topic | Details |
|---|---|
| What is SIP? | SIP is a method of investing a fixed amount regularly in mutual funds — often monthly or quarterly. |
| What happens if you miss 3 SIPs? | Banks may levy penalties, AMCs may cancel your SIP mandate, and your long-term compounding may suffer. |
| Penalty by bank | ₹100 to ₹750 per failed auto-debit, depending on your bank. |
| Does AMC charge penalty? | No direct penalty by the AMC, but they may cancel your SIP if you miss 3 consecutive payments. |
| Can SIP be paused? | Yes. Most AMCs allow pausing SIPs for 1–6 months without cancellation. |
| Best strategy if you’re struggling | Pause SIP instead of letting it fail. Restart when you’re financially ready. |
Missing three SIP installments may seem like no big deal, but the financial and psychological impact can be surprisingly large. From penalty charges to loss of long-term compounding, the cost of inconsistency adds up — sometimes to several lakhs of rupees.
Instead, plan ahead, use the pause feature, or reschedule your SIPs smartly to stay in control. SIPs are powerful tools for wealth creation — but only when they’re treated with the discipline they deserve.
What Is SIP and Why Is It So Popular?
A Systematic Investment Plan (SIP) is a tool that allows you to invest a fixed amount regularly into a mutual fund scheme. It’s one of the most disciplined ways to build wealth over time because it encourages consistency, removes emotional bias, and benefits from rupee cost averaging and compound interest.
Think of it like planting seeds each month — you may not notice the growth immediately, but over the years, those seeds grow into a sturdy financial tree.
see also: You Can Get a Return of ₹4.22 Lakh by Investing ₹2,500 Monthly
What Happens If You Miss 3 SIP Installments in a Row?
Missing one SIP might not hurt you too much, but if you miss three consecutive installments, here’s what might happen:
1. Your SIP Might Get Cancelled
Most mutual fund houses (AMCs) automatically cancel the SIP mandate after three consecutive missed payments. You won’t lose your existing investment, but the regular future contributions — and the compounding benefits they bring — will stop. According to Kotak Securities, AMCs typically deactivate a SIP after three failed auto-debits in a row.
Pro Tip: Keep an eye on your registered email or SMS alerts — fund houses usually notify you after missed SIPs.
2. You May Incur Bank Penalties
Your bank may charge a penalty between ₹100 to ₹750 per failed SIP auto-debit transaction, similar to an ECS bounce. If you’re already short on funds, this can snowball into more financial stress.
3. Your Financial Goals Could Be Delayed
Let’s say you planned to accumulate ₹50 lakh in 20 years through SIPs. Missing 3 installments per year could reduce your final corpus by several lakhs, due to the loss of compounding.
Example:
- Monthly SIP: ₹5,000
- Expected annual return: 12%
- Tenure: 20 years
If you invest consistently: ₹50.9 lakh
If you miss 3 SIPs per year: ₹44.1 lakh
Loss: ₹6.8 lakh just by missing 3 SIPs annually!
Why Consistency in SIPs Matters So Much
The power of SIP lies in compounding — your returns earn returns over time. Every missed SIP breaks this compounding chain.
It also affects:
- Rupee Cost Averaging: You buy fewer units during market dips if you miss SIPs.
- Discipline: Skipping SIPs reduces financial discipline and long-term wealth creation.
How to Manage SIPs During Financial Stress: Expert-Backed Strategies
1. Use the “Pause SIP” Option
Most mutual fund AMCs now offer a “Pause SIP” feature. It allows you to temporarily halt your SIP for 1 to 6 months — without permanently cancelling it.
How to pause your SIP:
- Log in to your AMC or mutual fund platform (like Groww, Zerodha Coin, Paytm Money).
- Navigate to your SIP dashboard.
- Select the SIP and choose “Pause” or “Suspend”.
- Confirm the duration and submit.
Visit Mutual Fund Sahi Hai for detailed instructions.
2. Set SIP Dates Right After Salary Credit
Choose a SIP date close to your salary date (e.g., 2nd or 5th of every month). This ensures you have sufficient balance in your account to avoid a bounce.
3. Use Emergency Funds Temporarily
If your SIPs are goal-linked (child’s education, retirement), consider using your emergency fund to maintain SIPs during a rough patch — only if absolutely necessary.
4. Cancel SIP Only as a Last Resort
If you’re genuinely unable to continue, cancel the SIP through your AMC’s app or platform. Just stopping your bank auto-debit (without AMC intimation) may still lead to penalties.
see also: FD Scheme of Post Office Has Won Everyone’s Heart, Get Big Benefit
Long-Term Impact of Missed SIPs
| Years of Investment | SIP of ₹5,000/month | Total Value (12% p.a.) | If 3 SIPs Missed/Year | Reduced Value |
|---|---|---|---|---|
| 10 Years | ₹11.6 lakh | ₹11.6 lakh | ₹10.3 lakh | -₹1.3 lakh |
| 20 Years | ₹50.9 lakh | ₹50.9 lakh | ₹44.1 lakh | -₹6.8 lakh |
| 25 Years | ₹95.6 lakh | ₹95.6 lakh | ₹82.9 lakh | -₹12.7 lakh |
Source: SIP Return Calculator (12% CAGR)
Installments of SIP FAQs
Q1. Will I lose my invested money if SIP gets cancelled?
No. Your existing units remain in your mutual fund account and continue to grow. You only stop making new contributions.
Q2. Can I restart a cancelled SIP?
Yes. You can start a new SIP with the same or different fund anytime through your platform or AMC portal.
Q3. Do mutual fund companies charge penalties for missed SIPs?
No penalty from AMC, but your bank may charge you for failed auto-debits.
Q4. How long can I pause a SIP?
Typically 1 to 6 months, depending on the AMC. You can resume it earlier if you like.
Q5. What should I do if I know I will miss a SIP?
Use the pause feature or manually cancel and restart later. Never let it fail silently.
