Some Fund Houses Allow Pausing And Restarting SIPs
Janani Vasudevan
During the pandemic, I reduced my systematic investment plan (SIP) investments to Rs 1,000 each from Rs 10,000 and Rs 5,000, respectively, earlier. I want to restore to the earlier levels but with some flexibility to increase or decrease. Is there a way to do this?
The flexibility that you are looking for to increase and decrease SIP investments is available but to a varying degree. Different fund houses offer different facilities in SIPs. Some give the facility of pausing and restarting SIPs for and within six months. Systematic top-up SIP facilities are also available. Some brokers even offer weekly SIPs.
One of the ways to restore to the earlier amounts is to start an additional SIP in the same fund or folio. You can do this online or offline by filling up a transaction form. In future, if you want to add to or reduce the SIP amount, you can cancel the old SIPs and start new ones with a different amount 15-20 days prior to the SIP dates.
For example, if you want to resume an SIP that was originally of Rs 10,000, and is now of Rs 1,000, you can start a new SIP of Rs 9,000 by selecting the same fund, same option and same folio number and it will get added to your original SIP. Registration of SIP takes 10-15 working days, so select a date for the new SIP to match the original SIP’s date. For instance, if the original date was 20th, and today is 2nd or 3rd, you will be able to get the same date as the earlier SIP and your SIP will start in this month itself. But, if today’s date is, say, 10th and you select the starting date for the new SIP as 20th, it will start from next month.
You could also get in touch with a certified financial planner or a mutual fund distributor for further guidance.
HINA SHAH Certified Financial Planner CM and Coach, LUHEM
Akruti Israni, Email
I can invest Rs 25,000 every month for my daughter. Would a combination of Gold exchange-traded fund (ETF), mutual fund SIP and equity shares work?
You have not mentioned the financial goal for which you would like to invest the amount that you have mentioned. It would definitely be good to diversify your monthly investments across mutual fund systematic investment plans (SIPs), equity shares and a Gold ETF. Among these, we suggest that you allocate not more than 5-10 per cent in a Gold ETF as gold is only a hedge against inflation and will not create significant wealth in the long run.
If you require the corpus for a financial goal that is more than 10 years away, it would be better to allocate the majority of your monthly investible surplus into equity mutual funds and shares. However, before choosing the appropriate products, it is important to do a proper risk analysis and, accordingly, select the appropriate category of mutual funds and equity shares to achieve the corpus amount that you need for your daughter.
Suhel Chander Certified Financial Planner CM, Handholding Financials
Shyama Singh
I want to increase my term insurance plan from Rs 1 crore to Rs 2 crore. Can I increase coverage of the existing plan, or will I have to buy a new one of Rs 1 crore? Should I opt for top-ups as I do not have any health cover?
Normally, in a term plan, you cannot increase the cover in your existing policy. However, you can increase your overall life insurance by taking a new plan with a sum assured of Rs 1 crore. Should you choose to do this, ensure that you disclose your existing cover when you apply for the new policy.
To determine how much life insurance cover you need, it is important to do a risk exposure exercise, taking into consideration your income and other important factors. This exercise will help in figuring out the appropriate amount of life cover that you need, based on which you can take a fresh term plan.
As you do not have any health insurance at present, you should go for a separate policy, and not a top-up. Top-up health covers are taken when one already has an existing health insurance policy.
Suhel Chander Certified Financial Planner CM, Handholding Financials