What is the main use of pause and play option in mutual fund or sip on Zerodha MF platform?

#1

how it helps for ELSS scheme?

#2

The pause/play button feature for SIP is unique to Zerodha MF platform only.

In traditional SIP the only way to stop an SIP is to cancel the ECS/NACH mandate form that would be given to the bank to debit money every month. This would typically require you to walk into a bank. Also if any month there was no money in the bank on the SIP date, it would be treated like a cheque bounce and charge applied. Also if on two such SIP dates there was no money in the bank, the ECS/NACH mandate gets cancelled and SIP is forcibly stopped and a new NACH mandate has to be sent to the bank. Btw, a separate NACH form is required to start SIP for every different AMC/Fund house (there are 40 AMC’s in India).

With Zerodha MF, we have taken away all of the above issues by introducing Pause/Play button. You can stop SIP whenever you want, start anytime you want - all without need of signing any NACH mandate forms or having to worry about paying any cheque bounce charges (if a particular month you are kind of tight to make the SIP payment).

Why would anyone want to stop? Multiple reasons, maybe if you are short money in your bank account any particular month, maybe if you believe that markets have run upto excessive levels, maybe if you want to stop SIP in one fund and start another.

In case of ELSS/Tax saving funds, if you stop it may not meet your yearly target that you have set for tax savings under section 80C. Otherwise all the advantages that I have mentioned above also applies for ELSS also.

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#3

Hi @Bhuvanesh @nithin @Kshiteesh_Saralaya ,
With the reference to above statement ,does the charge apply even for Zerodha’s AMC SIP feature if i dont have enough money in my zerodha account?

#4

Those funds which have stopped accepting lumpsum, we now switch to the normal AMC SIP. In which case, if there are no funds on the SIP date, there is a penalty (like a cheque bounce fees).

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