How to leverage the step-up SIP facility

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SIPs or systematic investment plans have become increasingly common for mutual fund investments. That is not surprising. Systematic investment plans are a convenient mode of investing in mutual fund schemes. They are suitable for young professionals who have just entered the job market and don’t have access to the investment amount required for lump sum mode. But please note that the investment amount is not set in stone while investing in mutual funds through SIP. You can use the step-up SIP facility to change your investment amount.

What is step-up SIP?

SIPs help you invest a fixed sum in mutual funds at regular intervals. This investment method differs from the lump sum mode, where you invest in full. Step-up SIPs facility that you can use as you see your monthly income increase. This facility allows you to increase your SIP amount. The step-up SIP facility can help you reach your investment goals quickly without burdening your finances. You can use an online increasing sip calculator to determine the required step-up SIP amount.

What are the benefits of step-up SIP?

Some benefits of the step-up SIP facility are:

  • Convenient:

Step-up SIPs remove the hassles associated with researching a new investment option on top of the existing one. You can opt for the step-up SIP facility and increase your investment to enjoy higher returns.

  • Inflation-beating returns:

Inflation has been rising in recent years, meaning the value of your investments will decrease over time. With step-up SIP investments, you might beat inflation and enjoy higher returns by increasing investment.

  • Higher returns:

This facility can help you increase your corpus fund faster, meaning you can achieve your financial goals sooner than expected at the start of your investment journey.

If you are wondering how much returns you could enjoy through the step-up SIP feature, use a SIP calculator with a step-up option and look at different scenarios.

How to set up a step-up SIP?

Here are the steps involved in setting up step-up SIP for your mutual fund investment:

  • Fill out the form:

Fill out the form for the Step-up SIP option. Enter details like the initial investment amount, step-up amount and frequency, and the final amount. Asset management companies (AMCs) give the option to increase your investment amount every year or six months.

  • Specify the investment amount:

You can also specify a cap on the maximum amount you wish to invest. This way, your SIP investment will increase until it hits the specified ceiling amount. After that, it will act as a regular SIP with the same investment amount.

How to leverage the step-up SIP facility?

Here is how you can leverage the step-up SIP feature:

1. Fixed-rupee basis:

Imagine you can start an investment of ₹10,000 per month after using a SIP step-up calculator. Then, you choose ₹2000 as the step-up amount for the frequency of one year. So, over the next four years, your investment amount will be ₹12,000, ₹14,000, ₹16,000, and ₹18,000.

2. Percentage basis:

Apart from the fixed rupee, you can also opt for stepping up your SIP investment on a percentage basis annually. For instance, you are investing ₹25,000 in your mutual fund scheme. If you choose 10%, your investment will increase by that percentage.

Between these two, people usually prefer the fixed-rupee basis. Regardless of the mode, an online sip calculator step-up can help you ascertain the investment amount.

Conclusion:

The step-up SIP feature is one of the best facilities for SIP investors. It can help accumulate long-term wealth quickly. A free online SIP step-up calculator can assist you in determining the investment amount.