Key Scenarios and the Common Pitfalls You Should Avoid

Product Updates
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In our previous post, we guided you through setting up a Stock SIP.

Now, let’s walk you through an example to illustrate how it works and highlight some common pitfalls to watch out for.

Examples of What Happens When You Use Stock SIP

Scenario: You set up a Monthly SIP with stocks like Reliance, Tata Motors, and Tata Power, and set up the UPI autopay with a limit of 15k. The SIP is automatically executed on the 3rd of each month.

Process:

Stock Previous Day Closing Price Quantity
Tata Motors (TATAMOTORS) ₹550 7
Tata Power (TATAPOWER) ₹250 10
Reliance Industries (RELIANCE) ₹2,300 3

Amount to be Debited a Day Before Due Date:

= (₹550 × 7) + (₹250 × 10) + (₹2,300 × 3) + 5%

= ₹3,850 + ₹2,500 + ₹6,900

= ₹13,250 + 5% (Additional margin to avoid market gap up)

= ₹13,912.50

Outcome: On Due Date, the SIP order will be executed and available as part of your order book.

Examples of issues that could cause the feature to not work correctly:

  • Insufficient Funds: If you don’t have enough balance in your bank account or Upstox wallet, your SIP might fail, and you’ll receive a notification to top up.

    To avoid this, please set up autopay.

  • Upper Circuit Limit: If a stock has hit the upper circuit limit (meaning there’s no liquidity), your SIP might fail to execute that stock purchase.

    To repair this, please place orders manually when stocks are tradeable.

  • Illiquid Stocks: If the stock becomes illiquid due to regulatory changes, your SIP for that stock will not be executed.

    To repair this, please place orders manually when stocks are tradeable.

  • Mandate Issues: If your bank mandate fails (e.g., insufficient balance, incorrect details), the autopay might not process. It’s essential to make sure you have a valid, active mandate in place.

    To avoid SIP failure, kindly maintain sufficient funds to your Upstox wallet.

In conclusion, while Stock SIPs offer a convenient way to invest, it’s important to ensure sufficient funds, set up autopay, and monitor stock liquidity to avoid common issues. By staying proactive, you can keep your SIPs running smoothly and stay on track with your investment goals.

Happy investing!

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