Top up your SIPs for a bigger equity gullak
economictimes.indiatimes.comSIPs) — a mutual fund equivalent of banks' recurring deposits — may be one of the best ways for retail investors to put money in equity schemes.
Those looking to maximise the benefits of this investment method could consider SIP top-up — a system that allows you to increase the SIP amount annually.
According to a study by WhiteOak Capital Mutual Fund, a SIP top-up can significantly boost absolute returns from equity products.
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For example, an investor with a SIP of ₹10,000 in the BSE Sensex TRI (Total Returns Index) after 25 years would reach ₹2.71 crore. However, an annual top-up of ₹1,000 on the monthly SIP of ₹10,000 would grow to ₹4.26 crore, while an annual top-up of 10% on the same SIP of ₹10,000 would grow to a substantial ₹5.52 crore,
«A SIP top-up helps you extend that discipline to your expected higher future surplus money as well,» said the note by WhiteOak Capital Mutual Fund.
Mutual fund investors have the option of doing a fixed amount top-up every year, wherein you can add amounts like ₹100 or ₹1,000 to your base SIP every year or opt for a variable amount top-up, which can be 10% or 15% of your original SIP amount.
«This method of topping up SIP can help young savers who have just started their job and expect their salaries to grow over time,» said S Shankar, CFP, Credo Capital
Financial planners said one of the biggest advantages of a SIP top-up is that it helps investors reach their goals
