Why You Must Increase Your SIPs Every Year | Motilal Oswal
Why You Must Increase Your SIPs Every Year | Motilal Oswal

Why Is It Essential To Strengthen Your SIPs Every Year

Pacing up your investments, incrementally, is the key to wealth creation. But then, the type of investment you choose clearly depends on your risk appetite. Investing in equity is a good option for a more aggressive outlook but it oddly sabotages your peace of mind. FDs can be easy enough to work with but the sluggishness of growth can even put snails to shame.

The need for balance beckons us to consider mutual funds. In simpler words, setting up a Systematic Investment Plan to put money periodically in mutual funds is arguably the most rewarding way to generate wealth and eventually build a sizable corpus. However, mutual funds sip investment plans, despite their potential, aren’t enough to help your financial stature grow.

To make the most of it, you must consider strengthening the SIP investment with each passing year, which then compounds into something considerable, upon maturity  

  • Reasons to Increase the Yearly SIP Strength
     

1. Better Planning

Inflation has always been a cause for concern. Therefore, having fixed systematic investment plans isn’t advisable if you wish to get by when inflation escalates uncontrollably. Therefore, it is better to review the portfolio each year and add more to the SIP corpus to account for the volatility.

2. Improved Financial Health

Unlike the equity market where larger investments are needed to make sizable gains, SIP investment can be minimally incremental with even a 5 percent strengthening expected to return a sizable corpus in the long run. 

  • How to Increase SIP Strength?
     

By now you must be aware of why SIPs are better off with incremental investments, each year. Here are some of the strategies to approach the same, seamlessly:

1. Choose Right

The flexibility of strengthening your SIP each year depends on how well you choose the mutual funds’ SIP investment plan. It is better to opt for an online SIP investment that aligns with your risk profile and is easy to add funds in. Also, it is recommended to open SIP online to approach fund amplification quicker and hassle-free. 

2. Fix the Incremental Frequency

While yearly SIP strengthening is advisable, a random approach is no good. To make it worth the effort, you must determine investment frequency, intervals, and even the amount.

3. Identify the Cap

If you plan on incrementally investing each month, you must put an investment cap to make the fund reach the ceiling limit, rather quickly.

Bottom-Line

Strengthening the SIP each year is a lucrative proposition if you are a perceptive and discerning investor. However, to make the approach seamless enough an online mutual fund SIP is the way forward, as it cuts down the unnerving offline jousting and paves the way for better fund management.

Related Articles: SIP and the Power of Compounding | 5 reasons for the sharp growth in SIPs in India | Why SIPs make a difference to your Mutual Fund Returns | Why you must not stop a mutual fund SIP once you start it | How to make your equity MF SIP work effectively for you

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