May 21, 2024

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Steps to redeem SIP investments

SIP investments


An SIP, or a systematic investment plan, has revolutionised the way people invest in mutual funds. It has made investing more accessible, convenient, and affordable for everyone. By allowing individuals to invest small amounts of money regularly, an SIP has made it possible for even those with limited financial resources to secure a better future for themselves.

But there may come a time when you need to redeem your investments for various reasons. It may be for education, marriage, or medical emergencies, or you may have reached the financial goal that you had set for yourself. No matter what the reason, the process of redeeming your SIP investment is hassle-free and straightforward, whether you choose to do it online or offline.

Way to redeem your SIP investment online

Step 1: Open any mutual funds investment app or your chosen mutual funds website. Now different types of mutual funds that you have invested in will be displayed. Select the SIP mutual fund you want to redeem and click on the ‘Redeem’ button.

Step 2: Enter the number of units you want to redeem and click on ‘Continue’.

Step 3: Review all the details, such as the redemption amount, bank account details, etc., and cross-check them to ensure accuracy. Click on the ‘Confirm’ button.

Step 4: You may receive a confirmation of your redemption request via email or SMS. A dedicated team will then verify your information after which the amount will be credited to your bank account. It can take 24 hours or more for the redemption amount to get credited depending on your investment scheme and when you request the redemption.

Way to redeem your SIP investment offline

Step 1.  Visit the nearest branch of your mutual fund house with the necessary KYC and other documents. You can also check out the list of documents needed for redemption on their website.

Step 2: Fill in the redemption request form with information such as your name, folio number, PAN number, scheme name, redemption amount, etc. Also specify your preferred mode of payment.

Step 3: Submit essential documents such as a cancelled cheque, identity proof, and address proof. These documents are necessary to authenticate your identity and to ensure that the payment is credited to the right person’s account.

Step 4: Now wait for processing. Mutual fund companies and fund houses have different processing times. Typically, the redemption process takes around 1-3 business days.

Step 5:  You will receive your payment as per the details specified in your redemption request form. If you have opted for NEFT, the payment will be credited to your bank account within 1-3 business days. If you have opted for a cheque, it will be mailed to your registered address.

Following the redemption process, you may receive an email notification or an SMS confirming that your funds have been transferred to your bank account.

To wrap up

While the SIP redemption process is relatively straightforward and easy, it can have a long-standing effect on your financial planning. Remember that investing through SIP s is a great way to invest in the market without having to worry about daily fluctuations and create wealth steadily. Hence you should only select the redemption option when it becomes absolutely necessary so that it does not disturb your financial plan.

Also, SIPs in ELSS mutual funds have different redemption criteria. Each instalment is considered a new investment with a three-year lock-in period counted from the day the units are issued. Therefore, it is important to plan accordingly if you intend to redeem your ELSS SIP investments.