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This article is more than 1 year old.

Looking to make the most of SIP investment? Use top-up facility to get more returns

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Most fund houses allow investors to decide the top-up amount right at the time when they start an SIP.

Looking to make the most of SIP investment? Use top-up facility to get more returns
A Systematic Investment Plan or SIP is one way to invest in mutual funds. Under SIP, a fixed amount is deducted from a specified savings account every month towards a mutual fund. Investors also have the option to increase the amount of the SIP Instalment by a fixed amount at pre-defined intervals. This facility is known as SIP top-up.
When should one use top-up SIP?
With a rise in income,  savings and investments should also increase over time, experts suggest. By increasing SIP installments every year with an increase in salary, one can accumulate a much larger corpus.
"SIP top-up can be done in line with current income, prospective yearly increments and of course financial goals.  This lays down a set plan for the investor to reach the predetermined investing amount over a period of time," according to ClearTax.
How SIP top-up works?
"SIP top-up allows investors to take advantage of a well-performing mutual fund scheme by increasing the investment amount," PaisaBazaar noted.
For example, if  an investor's SIP is Rs 10,000 per month as of May 2020, he can increase it to any amount, say Rs 11,000 per month in June 2020 or any other succeeding month under top-up SIP.
Some fund houses allow investors monthly top-up up to six consecutive months. Others allow investors to increase it annually.
How to use SIP top-up facility?
There are two ways to top-up SIPs.
"The traditional option is to simply decide how much more money per month one wants to invest and then he can start a fresh SIP. This can be either done in the same scheme or in another scheme in the same portfolio," suggests Groww.
Most fund houses allow investors to decide the top-up amount right at the time when they start an SIP. Investors can check with financial advisers or distributors about top-up facility as well.
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