Maximise Your Investment Using Step-up SIP: Raising Rs 5,000/month contribution by 10% annually can make a huge difference; see example

Investing through a Systematic Investment Plan (SIP) is one of the simplest ways to build wealth over time. But did you know that increasing your SIP contribution periodically can dramatically enhance your returns? Let’s explore how you can make the most of your investments using the top-up or step-up method.  

Why should you increase your SIP amount?  

Most salaried individuals receive an annual increment, and aligning your investment growth with your income increase is a smart financial strategy. By raising your SIP amount annually, you can benefit from the power of compounding while staying disciplined about saving.  

For instance, if you invested Rs 5,000 per month in the SBI Small Cap Fund 15 years ago at a return rate of 23 per cent, your wealth would have grown to Rs 62.48 lakh. Now, if you increased your SIP amount by 10 per cent annually, your wealth would have soared to Rs 94.94 lakh—a difference of over Rs 32 lakh!  

How to increase your SIP contribution  

There are two main ways to raise your SIP amount:  
1. Start a new SIP: You can begin another SIP in the same or a different scheme to supplement your ongoing one. However, the contributions won’t be clubbed, and you’ll need to track them separately.  
2. Opt for a top-up facility: Most fund houses now allow you to add an annual or biannual increment to your SIP during setup. This facility enables you to increase your investment automatically, without the hassle of starting a new SIP.  

Key considerations  

- Plan your increments: Decide the percentage or fixed amount you want to add each year. For instance, a 5 per cent annual increase means investing Rs 11,790 per month in the 10th year.  
- Set limits: If you foresee challenges in committing beyond a certain amount, many fund houses let you set a cap on your top-up. Once the limit is reached, your contributions stabilize.  
- Use NACH mandates: Thanks to the NPCI’s National Automated Clearing House system, you can register a one-time mandate with your bank for seamless increases in your SIP.  

Periodic SIP top-ups leverage your rising income and the power of compounding, significantly boosting your wealth creation. With disciplined investing, you can achieve your financial goals faster while staying stress-free. So, take a step forward today and let your SIPs grow along with you!