5 Reasons You Should Never Skip an SIP Instalment
If you’ve started a Systematic Investment Plan (SIP), you’re already ahead of the curve. SIPs make investing easy and disciplined, especially for long-term goals like retirement, education, or wealth building. But here’s something many investors don’t realize: skipping even a single SIP instalment can derail your progress in big ways.
Think of SIPs like building blocks. Remove one, and the whole structure weakens. In this blog, we’ll walk you through 5 strong reasons why you should never skip an SIP instalment—with data, examples, and actionable tips.
You Lose More Than Just That One Instalment
Skipping a single SIP payment may seem harmless, but it has compounding consequences.
The Math Behind One Missed SIP
| Monthly SIP | Investment Period | Expected Return (12% p.a.) | Final Corpus (Without Skipping) | Final Corpus (Skipping 1 Year) | Wealth Lost |
|---|---|---|---|---|---|
| ₹5,000 | 20 years | 12% | ₹49.5 lakh | ₹43.4 lakh | ₹6.1 lakh |
Missing 12 SIPs of ₹5,000 (i.e. ₹60,000 in total) ends up costing you ₹6.1 lakh. That’s more than 10x what you thought you were “saving.”
Why? Because you’re not just losing principal, you’re missing out on years of compounding. Money grows faster over time, especially towards the end of your investment journey.
Also Read :- Step-Up SIP: A Smart Way to Grow Your Investments
You Break the Power of Rupee Cost Averaging
One of the biggest benefits of SIPs is Rupee Cost Averaging (RCA). This strategy helps you buy more units when prices are low and fewer when prices are high.
Skipping an instalment means:
- You miss buying units when markets are down (which are the best times to invest).
- Your average cost per unit increases.
- You miss out on market recovery gains.
Example:
| Month | NAV (₹) | SIP (₹) | Units Bought |
|---|---|---|---|
| Jan | 50 | ₹5,000 | 100 |
| Feb | 45 | ₹5,000 | 111.11 |
| Mar | 40 | ₹0 (Skipped) | 0 |
| Apr | 42 | ₹5,000 | 119.05 |
By skipping March, you miss buying at the lowest NAV! RCA only works if you stay consistent, especially during volatility.
You May Face Penalties and SIP Cancellation
While most mutual fund houses don’t charge a penalty for missed SIPs, your bank does. If your SIP fails due to insufficient balance, you may be charged a failed auto-debit penalty.
Bank Charges for Missed SIPs
| Bank | Penalty per Failed Transaction |
|---|---|
| HDFC Bank | ₹500–750 + GST |
| ICICI Bank | ₹350–600 + GST |
| SBI | ₹250–500 + GST |
New SEBI Rule (2024):
- 3 missed SIPs in a row? Your SIP will be automatically cancelled.
- For quarterly SIPs, just 2 missed payments can cancel the plan.
That means your long-term financial plan could be disrupted, and you’ll need to start all over again—paperwork, bank approvals, everything.
Also Read :- From SIP to SWP: Your Path to Financial Freedom
You Delay Compounding – The Real Wealth Builder
Compounding is the secret sauce of investing. The more time your money gets to grow, the larger your returns.
Here’s how skipping SIPs can delay or reduce compounding:
| Monthly SIP | Duration | Returns @12% | Corpus |
|---|---|---|---|
| ₹10,000 | 30 years | ₹62 lakh | ₹62 lakh |
| Miss 1 year | 29 years | ₹10,000 x 348 months | ₹54.9 lakh |
| 🔻 Loss | 1 year less | ~₹7.1 lakh |
Even a 1-year gap can shave lakhs off your final amount.
This is because compounding accelerates over time. So, the money you skip today doesn’t just stop working—it stops multiplying.
You Break Discipline and Develop Bad Habits
SIPs are powerful because they enforce investment discipline. They:
- Automate your investments
- Reduce emotional decision-making
- Help you avoid market timing
But skipping SIPs creates a dangerous pattern:
“I’ll skip this month… I’ll resume next month… maybe after bonus season…”
And suddenly, you’ve missed 3–4 months. Once the discipline breaks, it’s hard to rebuild.
Consistent investors often outperform smarter ones simply by being regular and unemotional. Discipline wins over time.
Real-Life Investor Story
Take the case of Anuj, a salaried professional who maintained his ₹10,000 SIP for 15 years through market crashes, job changes, and COVID. His investment grew to ₹50+ lakh.
His friend Rohit started SIPs at the same time but paused it during the 2008 crash and 2020 pandemic. Despite investing for the same duration, Rohit’s corpus is ₹14 lakh less than Anuj’s—just because of missed months.
Also Read :- How to Build Wealth with Mutual Funds: 5 Proven Strategies That Work
What to Do If You Genuinely Can’t Pay?
If you’re facing financial stress, don’t just let the SIP auto-debit fail. Instead:
Options to Consider:
| Option | Benefit |
|---|---|
| Pause SIP | No penalties. Can resume later. |
| Lower SIP Amt | Still maintains habit of investing. |
| Switch to ELSS | Get tax savings (under 80C). |
| Talk to an Advisor | Build a new short-term plan. |
Mutual funds and banks allow you to pause SIPs for a few months. Use this flexibility instead of letting your investment journey suffer.
Conclusion: Stay the Course
SIP investing is like a marathon, not a sprint. Even small stumbles—like missing a few instalments—can significantly reduce your final corpus.
To summarise, skipping SIPs:
- Costs you lakhs in the long run
- Breaks rupee cost averaging
- Leads to penalties and plan cancellation
- Delays compounding benefits
- Disrupts your financial discipline
💡 Golden Rule: If you can’t increase your SIP, at least don’t skip it. Stay invested, stay disciplined.
FAQs (Frequently Asked Questions)
1. What happens if I skip one SIP instalment?
You may not face immediate penalties from the fund house, but banks may charge you for failed auto-debits. You also lose potential returns due to missed compounding.
2. How many SIP instalments can I miss before it gets cancelled?
As per SEBI (April 2024), three consecutive missed monthly SIPs—or two missed quarterly SIPs—can lead to automatic cancellation.
3. Can I pause my SIP instead of skipping?
Yes, most fund houses allow SIPs to be paused for 1–6 months. It’s a better option than skipping, as it avoids charges and preserves discipline.
4. Is it okay to miss SIPs during market downturns?
Not advisable. SIPs perform best during market volatility due to rupee cost averaging. Skipping them during downturns means losing out on buying low.
5. How do I restart my SIP if it gets cancelled?
You’ll need to re-register through your mutual fund platform or broker. This includes choosing the fund, amount, date, and bank mandate again.
