Increase your SIP amount periodically

A systematic investment plan (SIP) allows you to put a fixed sum of money every month in a mutual fund. But most of us get a raise in our salaries every year. This means we can afford to increase our investments. But how do you do that in an existing SIP? Enter top-up or step-up facility. It is important that as your income grows, the quantum of investment should grow too. Here's why: say, you invest Rs 5,000 every month for the next 20 years. Assuming that your fund grows at 12 per cent a year, you will end up making Rs 49.46 lakh on your total investment. But if you slightly increase your SIP amount every year, once a year by 10 per cent, then you will end up making Rs 98.4

This article was originally published on October 12, 2020.