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SIP is a way of investing regularly. Whatever the market level, you can continue it.
It is still an annual apparel time for employed people. During this time, if your salary increases, then this is the right time to consider your investment plan.
Increasing investment during this time is a good way. If you already do regular SIP in mutual funds, now you can turn it into step-up SIP.
In this story, we will know what is step-up SIP and how it can benefit you…
Saval 1: What is Step-up SIP?
This is an upgrade version of a normal SIP, in which you increase your investment amount at an annual or regular interval. It increases as your salary increases, so that you can invest more money on the pocket without extra burden.
For example, if you start investing from Rs 5,000 per month and increase it 10% every year, then the second year you will invest Rs 5,500, the third year 6,050 rupees and further. Over time, this small increase can make your total investment significantly.
Saval 2: How does Step-up SIP calculator help?
This is a tool that according to your needs tells that if you increase the SIP amount every year, then how will your money increase. All you have to do is put some basic details like –
- How many SIPs want to start.
- What percentage do you want to increase every year.
- For how many years there is an investment plan.
- How many % of the annual returns expect.
Based on your inputs, the step-up SIP calculator will tell how much your money will increase. With this you can see different cinematics, such as how much returns will be available on increasing 5% and 10% and can choose which is correct according to your financial goals and income growth.
Sawal 3: Why increase SIP when salary increases?
After increasing the salary, your bank account starts getting more money than before, but if they do not put them in the right place, then they are spent in everyday expenses and do not even know. Step-up sip:
- Your savings grow with your earnings – if the income is increasing, but not the investment, then it will take more time for your long goals to be completed.
- Money grows rapidly – Every year a slight increase in SIP can create a big fund than compounding power.
- Financial discipline remains – you first save by automating SIP, then expenses, which is the best way of prolonged financial success.
Saval 4: How to start step-up SIP?
Step-up SIP options are available on many investment apps and platforms. While signing-up, you can choose the time of step-up amount or percentage and frequency i.e. how much time you want to increase the amount of investment. This process is easy. This does not require you to increase SIP manually every year.
Saval 5: What is important to take care of before increasing SIP?
- Check the budget – Before investment, keep in mind that the increased SIP does not affect your necessary expenses.
- Keep realistic expectations – Look at the growth from the calculator, but remember that the returns of mutual funds depend on the market, it is not a guarantee.
- Say with salary growth – Choose step-up percentage that matches your average annual salary increase. For most, 5% to 10% is fine.
Sip + step-up a powerful combination
Step-up SIP helps in saving every month and increasing large wealth in a long time. It is better for big targets like retirement, children’s education or buying a house. Suppose, you start a SIP of 10,000 rupees a month and increase 10% every year. For 15 years, if you consider 12% annual return, then your fund will be much larger than the flat of Rs 10,000. This difference is clearly visible from the calculator.
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