You always have an option to increase the amount of SIP periodically with the top-up or step-up facility in an ongoing SIP. With time we all get a raise in salary and with raise, we get two options to choose from either we can increase our spending or saving. For a secure future, one must choose wisely and increase their saving or say investment. The question here is how do you do that in an ongoing SIP? Here you can avail of the top-up or step-up feature of your fund.
Here’s why you should increase the quantum of investment with the rise in your income: Say, you invest Rs5,000 every month for the next 20 years. If your fund grows at a modest 12% a year, you will end up making Rs49.46 lakh on your total investment. But if you increase your SIP amount every year, say by 10%, then you will end up making Rs98.45 lakh.
How to step-up your SIP?
There is two way in which you can do so –
- After deciding how must extra you want to invest you can start afresh SIP, either in the same fund or can start investing in new funds in the same folio. Even you start investing in the same fund your new investment won’t get clubbed with the old one.
- Or, you can use a step-up feature of SIP, with this your contribution will increase automatically according to the pre-decided amount and pre-decided periodicity. This feature covers your investment according to the increase in your disposable income. This top-up option must be specified by the investor while enrolling for the SIP facility.
- You can contact your fund manager or can visit Ashutosh Securities Pvt. Ltd. for any assistance in the step-up of SIP.
Conditions of step-up SIP feature –
- The minimum SIP step-up amount is Rs 500 and its multiple.
- The step-up details once filled cannot be modified, in order to make any changes, the investor will be needed to cancel the existing SIP and start the fresh SIP including the top-up option.
- In the case of monthly SIP, one has step-up periodicity available of half-yearly as well as yearly. In case an investor doesn’t specify any periodicity, half-yearly frequency is considered as default frequency.
- In the case of Quarterly SIP, only yearly frequency is available as a SIP step-up.
- Other terms and conditions are the same as regular SIP investment.
- SIP Top-up facility shall be available for SIP Investments through ECS (Debit Clearing) / Direct debit facility only.
The reason why SIP step-up calls for a separate procedure is that for SIP you give your bank a mandate to debit a certain amount from your savings account regularly. This mandate is specifically registered for that SIP transaction, for another transaction you need a fresh mandate. However, now due to NACH (National Automated Clearing House), this system is put in place by NPCI (National Payments Corporation of India), an investor can now give a one-time mandate of a certain amount which allows you to invest any time within the limit of your mandate.
You should always increase your investments in line with the increase in your income. This strategy would help you to achieve your long-term financial goals.
You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).