Say, you start investing in a Systematic Investment Plan (SIP) every month to build a healthy retirement corpus. To your delight, you get a decent salary hike or make some extra income and wish to invest the additional amount instead of spending it every month. Now, a conventional option would be to start a fresh Systematic Investment Plan.
Thankfully, top-up or step-up facilities are available to let you increase your investment contribution with an increase in income. This way, you can fully leverage the power of the compounding effect.
Wondering how to increase SIP amount in mutual funds? Keep reading.
Mutual funds offer SIP top-up facility, wherein the monthly SIP instalment can increase by a fixed percentage or amount after a certain interval.
For instance, a mutual fund might offer you a top-up facility where the SIP investment increases by 12% every 12 months. This is an excellent way to increase and streamline your savings with an increase in your income. As the SIP amount keeps increasing, so does the overall investment corpus.
Here are the key benefits of considering SIP top-up-
Planning your SIP top-up in line with an increase in your income will help you grow your investment in the long term as you don’t have to change the proportion of your investment.
SIP top-up can help you keep up with inflation by allowing you to top-up your SIP amount by a fixed percentage that is higher than the average inflation rate. For instance, if the average inflation rate is 7.5% in India, you can top-up your SIP amount by 7.5% or more to tackle inflation.
SIP top-up might help you reach your financial goals faster than regular SIPs as regular increase in SIP investment may help you achieve the total corpus sooner.
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You can increase your SIP amount by opting for a top-up facility. Under this facility, the monthly SIP amount increases by a fixed percentage after a specific period.
SIP top-up is beneficial as it allows you to increase your investment amount as your income grows, helping you accumulate a larger corpus over time and maximise returns.
A top-up SIP calculator helps you estimate the future value of your investments by adjusting for periodic SIP increases. It shows how increasing SIP contributions can enhance your long-term returns.
The main difference between a top-up SIP and a regular SIP is the flexibility. Top-up SIPs allow investors to periodically increase contributions, whereas regular SIPs have fixed contributions.
Step-up SIPs are sometimes also referred to as top-up SIPs. These funds allow investors to increase their investment amount during the SIP’s tenure periodically.
Top-up SIP plans allow investors to increase the amount they invest regularly. This is usually based on a predetermined amount.
Top-up funds, also known as step-up funds, are a type of mutual fund. These allow investors to increase their SIP instalments by a fixed amount or at specific intervals.