A top up systematic investment plan (SIP) from a mutual fund helps you enhance your SIP investment periodically. Basics you must know.
Top Up systematic investment plans (SIP) i.e. Top Up SIP, also known as Step Up SIP, allows an investor to increase SIP instalments by a fixed amount at pre-defined periods. This, in effect, ensures that your regular investments increase over time even as your income increases. It also saves the time involved in signing up for a new SIP with higher regular investment amounts.
Here’s an illustration.
If you start an SIP of Rs 5,000 for five years and choose a half-yearly top up of Rs 500. Your SIP amount will keep increasing by Rs 500 every six months. By the end of third year, your SIP amount will be Rs 8,000.
Remember, most fund houses don’t allow you to modify the top up amounts once you sign up. So, plan well. A modification will mean starting a new SIP.
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