SIP Top-Up: Responsibilities will increase with age and through this small top-up you will be able to see a big difference in the corpus deposited from the fund.
SIP Top-Up: Not only does it seem difficult to invest by depositing large amount in one go, but the risk of investing wrong time in options like equity is more in it. In such a situation, Systematic Investment Plan (SIP) is available, through which you can invest small amount every month and also accumulate a large corpus in the long run. Diversification also becomes easy through SIP and you can easily invest for different investment goals and time. But at the same time, goals change and responsibilities also change in life. In such a situation, you can increase your investment by top-up in the same SIP.
What is SIP Top-Up?
Responsibilities also increase as you get older. Responsibilities increased when the family grew, the goals of children from education to the big house are added to life. In such a situation, financial planning needs to be reviewed. With experience in career, your salary or income will also increase. SIP Top-Up allows you to increase investment from time to time as salary increases. Suppose you do a SIP of 5000 rupees in a fund every month and you want to increase your investment by 10 per cent every year, if you consider it to be 10 per cent appraisal. In this SIP, you can decide 10% increase every year so that from next year, your fund will go to SIP of 5500 rupees.
A small edge can also do big things through compounding. You can also decide a sum for the top-up. This means that instead of 10 percent, you can also decide an increase of only 500 rupees per month.
SIP Top-Up: How Much Will It Benefit?
Suppose you are running a target of 10 years for the education of children and for this, do SIP in mutual funds. You will be able to deposit Rs 11.61 lakh in 10 years after doing a SIP of 5000 every month and at an annual interest rate of 12 per cent. Here, if you had also top-up only 500 rupees annually, then you would have been able to deposit Rs 15.72 lakhs in 10 years. Through SIP Top-Up, you deposited 35 percent more money. If you had done a SIP top-up of 1000 rupees here, then you would have deposited 19.83 lakhs.
How to top-up?
Many mutual funds give you the option of choosing the top-up option at the time of starting SIP, while many give you the option of choosing this option in the middle even after starting SIP. For this, you have to fill a separate form. You have to fill all the information about the scheme or plan, the date of SIP, how much time to increase.
Tata Mutual Fund also offers a top-up option in the middle of SIP but in SBI Mutual Fund you have to choose the top-up option only when starting SIP. Most fund houses have this facility available on all schemes but the minimum top-up can be 500 rupees. Top-up facility can be availed every half year or every year.
If you want to make any changes in the top-up, then for that you have to cancel your SIP and start a new SIP.
If you do not want to choose this option, then you can start a new SIP every year, but keep in mind that you can manage it properly.
