How Stepping Up SIP Every Year Gives A Boost To Your Wealth
Apr 27, 2019

Author: Divya Grover

(Image source: Image by mohamed Hassan from Pixabay)

Have you ever sowed a seed to grow a tree? If yes, you will know that it requires investment in the form of good soil and a reasonable amount of water and sunlight. And with that, soon your seed will grow into a plant.

But if you want it to grow and become a full grown tree, it will need more water than it previously required.

Growth is the essence of life.

Just like trees, your investment also needs a boost from time to time to grow. Consider this example-

Riya and Priya started an investment of Rs 5,000 on a monthly basis in the same Mutual Fund schemes via Systematic Investment Plan (SIP).

At that time, Riya opted for Step-up facility of her SIP, which meant she could increase her SIP contribution year-after-year by a fixed amount or percentage. She registered to increase her contribution by 10% every year.

Priya, on the other hand, wasn't sure about registering for the Step-up option and chose not to do so.

After 10 years, assuming an annual rate of return of 12%, Riya's corpus will grow to Rs 16.8 lakh, while that of Priya will grow to Rs 11.6 lakh. That is a difference of around Rs 5 lakh.

If we calculate the same for a period of 20 years, Riya's corpus will grow to Rs 99.4 lakh and Priya's corpus will grow just close to Rs 50 lakh.

Within a span of 20 years, Riya's wealth will almost double compared to that of Priya.

This is the incredible benefit of stepping up your SIP.

Like Riya, if you wish to increase your wealth exponentially, increasing your SIP contribution every year could prove beneficial.

Here are three key benefits of stepping up your SIP instalment:

1) Facilitates building a bigger corpus

Most people start investing via a SIP but don't consider increasing their contribution even when their income and surplus increases every year. By stepping up your SIP instalment, it adds to the power of compounding, and the potential return enables you to build a bigger corpus to accomplish your future financial goals.

If you wish for a handsome amount in your hand at the end of 10, 15, or 20 years, increase your monthly SIP instalment year-after-year. Even a small increase now can make a big difference in the long-term.

2) Counters inflation

Earning an effective real rate of return, or to put it simply, return adjusted for inflation, is an important factor to be considered while investing.

Earning a higher real return helps you achieve your financial goals comfortably by countering inflation, which otherwise erodes the purchasing power of your hard-earned money.

Inflation increases every year, the amount that seems substantial today will not have the same value a few years down the line. Hence, if you don't increase your monthly SIP instalment every year, it means that you are ignoring inflation - making a big mistake!

3) Achieve the envisioned goals faster

By increasing your contribution every year, you would be able to achieve your goals faster than expected. For example, by increasing your SIP by 20% every year, you may be able to plan an early retirement. However, this will depend on by how much you decide to step up your SIP instalment and the amount you require to fulfil your goal.

[Read: Is Your Mutual Fund On Track To Achieve Your Financial Goals?]

The table below explains how different levels of a percentage hike in monthly SIP year-after-year, starting with a monthly SIP instalment of Rs 5,000 in the first year will grow your wealth over 20 years, assuming an annual rate of return of 12%.

Table: How increasing SIP instalment every year enriches the power of compounding...

% increase in SIP Corpus at the end of tenure (in Rs)
0 49,95,740
5 68,68,812
10 99,44,358
15 1,51,27,971
20 2,40,21,370
(Note: For illustration purpose only)

As seen in the table, if the amount invested via SIP doesn't increase, the amount that you will earn at the end of tenure will be very low. In comparison, if the SIP is hiked even by 5% or 10%, the amount at the end of tenure will be significantly higher.

How you can do it...

You can either increase your SIP by a certain fixed percentage or a fixed amount. The increase can either be in a new scheme or an existing one. You can set an upper limit on the amount so that the hike does not exceed your budget.

An appraisal is the best time to do so as you may have got a salary hike and/or bonus. You may opt to increase your monthly SIP instalment in line with the increase in income. Your expenses may not necessarily increase with the extra income, which will allow you to make the additional investment. Your priority should be to achieve the existing goals; and hence, you should avoid aligning the additional investment to new goals.

If you have received a bonus, you may park your money in a liquid fund and opt for Systematic Transfer Plan (STP) to transfer money in equity funds regularly.

In case you did not receive a salary hike, you can still check if circumstances allow you to increase your investment.

For any investment proper planning is very important. You should set realistic goals to be able to achieve them.

After that, carefully decide your monthly SIP amount keeping in mind your goals, risk appetite and time horizon. Increase your investment as and when your income increases or if you have a surplus in your hand. It will help you to beat inflation and accomplish your goals.

Lastly, be patient once you have selected the right mutual fund schemes and follow the needed investment discipline.

PS: Still undecided about mutual funds for starting a fresh SIP? Don't worry. PersonalFN is offering you three premium research reportsat a price lesser than that of your favourite coffee.

These research reports will provide you superlative guidance to select worthy mutual fund schemes to SIP, the ones that have the potential to provide BIG gains, and the ones for your tax planning this year. Click here for PersonalFN's recommendation and subscribe now!



Add Comments

Comments
morganreed111@gmail.com
Jun 17, 2019

I want to share a testimony of how Dr UDI herbal mixture cream saved me from shame and disgrace, my penis was a big problem to me as the size was really so embarrassing ,and i was also having weak erection problem i had so many relationship called off because of my situation, i have used so many product which i found online but none could offer me the help i searched for Which was very painful and then i saw some few testimonies about this herbal specialist called Dr UDI and decided to email him on so I gave his herbal product a try. i emailed him and he got back to me and we discussed, he gave me some comforting words and encouraged me also ans then gave me his herbal pills and cream for Penis Enlargement Within 1 week of it, i began to feel the enlargement of my penis, " and now it just 2 weeks of using his products my penis is about 10 inches longer and am so happy contact Dr UDI via (drudiherbalhome@gmail.com) Via whatapp on this number +2348051243538
babadoctorobodubuspiritualhome@gmail.com
May 01, 2019

Do You Need A Powerful Africa Native Doctor? I Mean A Spiritual Herbalist With Great Spirit Connected To Ancestors. Call +2347059225064 Dr Obodubu Monday Is A High Voodoo Priest Master. He is a Spell Caster, Native Doctor, Spiritual Herbalist, Powerful Sickle cell Healer, Spiritual Astrologer, Psychic Reader, Multi Guru, Witch Doctor, Priest Of Africa Money Ritual. Have You Been To Native Doctor to Native Doctor Without Any Solution To Your Problems Or Rather Add To it? Have You Been To Place To Place In View Of A Powerful Native Doctor That Can Solve All Your Predicament, You Must Understand That There Is A Native Doctor That Supersede All Native Doctor Among All Native Doctor, If You Are In Search Of A Powerful Native Doctor With Great Spiritual Powers, Then You Must Be In Search Of A Native Doctor That Derives Power From The Marine World. That Is The Spirituality Of The Greatest Africa Native Doctor Obodubu. Dr Obodubu Is Recognized All Over The World Of Marine Kingdom, As One Of The Top Fortunate And Most Powerful Native Doctor Of Charms Casts From The Beginning Of His Ancestors ship Until Now Dr who lives Strong Among All Other Native Doctors, There Have Never Been Any Form Of Impossibility Beyond The Control Of Dr Obodubu. It Doesn't Matter The Distance Of The Person With The Problems Or Situation, All You Have To Do Is Believe In The Native Obodubu charms Casts That Works, He Always Warns Never To Get His Charms Casts If You Do Not Believe Or Unable To Follow His Instruction. It Is The Assignment Of The Native Doctor Obodubu To Offer Services To Those In Need Of Spiritual Assistance Not Minding The Gravity Of Your Situations Or Distance As Long As Water, Sea, Ocean, Lake, River Sand etc. Are Near You, Then Your Problems Of Life Would Be Controlled Under Your Foot. If You Need Any Spiritual Help On Any of These: Get Your Lover Back Fruit Of The Womb Fibroid Business Boom Financial Breakthrough Get Rich Without Ritual 07059225064 Do As I Say Bad Dream Promise And Fail Epilepsy Spiritual Attack Land/Court Case Mental Disorder Political Appointment Visa Approval Cancer Examination Success Spend And Get Back Good Luck Natural Health Hypertension Diabesity (Diabetic+Obesity Stroke Sickle Cell Impotency Win Court Case Promotion At Work Commanding Tone Protection Ring Marriage Success Love Ring Favour Ring Recover Lost Glory Spiritual Power For Men Of God Travel Success Ring Job Success Lotto/Pool Win And Many More. Make Haste To Call Dr Obodubu Monday On +2347059225064. Or Mail Him to babadoctorobodubuspiritualhome@gmail.com For Spiritual Problem Today And You Will Surely Get Solution To All Your Predicament. Email: babadoctorobodubuspiritualhome@gmail.com
babadoctorobodubuspiritualhome@gmail.com
May 01, 2019

Do You Need A Powerful Africa Native Doctor? I Mean A Spiritual Herbalist With Great Spirit Connected To Ancestors. Call +2347059225064 Dr Obodubu Monday Is A High Voodoo Priest Master. He is a Spell Caster, Native Doctor, Spiritual Herbalist, Powerful Sickle cell Healer, Spiritual Astrologer, Psychic Reader, Multi Guru, Witch Doctor, Priest Of Africa Money Ritual. Have You Been To Native Doctor to Native Doctor Without Any Solution To Your Problems Or Rather Add To it? Have You Been To Place To Place In View Of A Powerful Native Doctor That Can Solve All Your Predicament, You Must Understand That There Is A Native Doctor That Supersede All Native Doctor Among All Native Doctor, If You Are In Search Of A Powerful Native Doctor With Great Spiritual Powers, Then You Must Be In Search Of A Native Doctor That Derives Power From The Marine World. That Is The Spirituality Of The Greatest Africa Native Doctor Obodubu. Dr Obodubu Is Recognized All Over The World Of Marine Kingdom, As One Of The Top Fortunate And Most Powerful Native Doctor Of Charms Casts From The Beginning Of His Ancestors ship Until Now Dr who lives Strong Among All Other Native Doctors, There Have Never Been Any Form Of Impossibility Beyond The Control Of Dr Obodubu. It Doesn't Matter The Distance Of The Person With The Problems Or Situation, All You Have To Do Is Believe In The Native Obodubu charms Casts That Works, He Always Warns Never To Get His Charms Casts If You Do Not Believe Or Unable To Follow His Instruction. It Is The Assignment Of The Native Doctor Obodubu To Offer Services To Those In Need Of Spiritual Assistance Not Minding The Gravity Of Your Situations Or Distance As Long As Water, Sea, Ocean, Lake, River Sand etc. Are Near You, Then Your Problems Of Life Would Be Controlled Under Your Foot. If You Need Any Spiritual Help On Any of These: Get Your Lover Back Fruit Of The Womb Fibroid Business Boom Financial Breakthrough Get Rich Without Ritual 07059225064 Do As I Say Bad Dream Promise And Fail Epilepsy Spiritual Attack Land/Court Case Mental Disorder Political Appointment Visa Approval Cancer Examination Success Spend And Get Back Good Luck Natural Health Hypertension Diabesity (Diabetic+Obesity Stroke Sickle Cell Impotency Win Court Case Promotion At Work Commanding Tone Protection Ring Marriage Success Love Ring Favour Ring Recover Lost Glory Spiritual Power For Men Of God Travel Success Ring Job Success Lotto/Pool Win And Many More. Make Haste To Call Dr Obodubu Monday On +2347059225064. Or Mail Him to babadoctorobodubuspiritualhome@gmail.com For Spiritual Problem Today And You Will Surely Get Solution To All Your Predicament. Email: babadoctorobodubuspiritualhome@gmail.com
babadoctorobodubuspiritualhome@gmail.com
May 01, 2019

Do You Need A Powerful Africa Native Doctor? I Mean A Spiritual Herbalist With Great Spirit Connected To Ancestors. Call +2347059225064 Dr Obodubu Monday Is A High Voodoo Priest Master. He is a Spell Caster, Native Doctor, Spiritual Herbalist, Powerful Sickle cell Healer, Spiritual Astrologer, Psychic Reader, Multi Guru, Witch Doctor, Priest Of Africa Money Ritual. Have You Been To Native Doctor to Native Doctor Without Any Solution To Your Problems Or Rather Add To it? Have You Been To Place To Place In View Of A Powerful Native Doctor That Can Solve All Your Predicament, You Must Understand That There Is A Native Doctor That Supersede All Native Doctor Among All Native Doctor, If You Are In Search Of A Powerful Native Doctor With Great Spiritual Powers, Then You Must Be In Search Of A Native Doctor That Derives Power From The Marine World. That Is The Spirituality Of The Greatest Africa Native Doctor Obodubu. Dr Obodubu Is Recognized All Over The World Of Marine Kingdom, As One Of The Top Fortunate And Most Powerful Native Doctor Of Charms Casts From The Beginning Of His Ancestors ship Until Now Dr who lives Strong Among All Other Native Doctors, There Have Never Been Any Form Of Impossibility Beyond The Control Of Dr Obodubu. It Doesn't Matter The Distance Of The Person With The Problems Or Situation, All You Have To Do Is Believe In The Native Obodubu charms Casts That Works, He Always Warns Never To Get His Charms Casts If You Do Not Believe Or Unable To Follow His Instruction. It Is The Assignment Of The Native Doctor Obodubu To Offer Services To Those In Need Of Spiritual Assistance Not Minding The Gravity Of Your Situations Or Distance As Long As Water, Sea, Ocean, Lake, River Sand etc. Are Near You, Then Your Problems Of Life Would Be Controlled Under Your Foot. If You Need Any Spiritual Help On Any of These: Get Your Lover Back Fruit Of The Womb Fibroid Business Boom Financial Breakthrough Get Rich Without Ritual 07059225064 Do As I Say Bad Dream Promise And Fail Epilepsy Spiritual Attack Land/Court Case Mental Disorder Political Appointment Visa Approval Cancer Examination Success Spend And Get Back Good Luck Natural Health Hypertension Diabesity (Diabetic+Obesity Stroke Sickle Cell Impotency Win Court Case Promotion At Work Commanding Tone Protection Ring Marriage Success Love Ring Favour Ring Recover Lost Glory Spiritual Power For Men Of God Travel Success Ring Job Success Lotto/Pool Win And Many More. Make Haste To Call Dr Obodubu Monday On +2347059225064. Or Mail Him to babadoctorobodubuspiritualhome@gmail.com For Spiritual Problem Today And You Will Surely Get Solution To All Your Predicament. Email: babadoctorobodubuspiritualhome@gmail.com
babadoctorobodubuspiritualhome@gmail.com
May 01, 2019

Do You Need A Powerful Africa Native Doctor? I Mean A Spiritual Herbalist With Great Spirit Connected To Ancestors. Call +2347059225064 Dr Obodubu Monday Is A High Voodoo Priest Master. He is a Spell Caster, Native Doctor, Spiritual Herbalist, Powerful Sickle cell Healer, Spiritual Astrologer, Psychic Reader, Multi Guru, Witch Doctor, Priest Of Africa Money Ritual. Have You Been To Native Doctor to Native Doctor Without Any Solution To Your Problems Or Rather Add To it? Have You Been To Place To Place In View Of A Powerful Native Doctor That Can Solve All Your Predicament, You Must Understand That There Is A Native Doctor That Supersede All Native Doctor Among All Native Doctor, If You Are In Search Of A Powerful Native Doctor With Great Spiritual Powers, Then You Must Be In Search Of A Native Doctor That Derives Power From The Marine World. That Is The Spirituality Of The Greatest Africa Native Doctor Obodubu. Dr Obodubu Is Recognized All Over The World Of Marine Kingdom, As One Of The Top Fortunate And Most Powerful Native Doctor Of Charms Casts From The Beginning Of His Ancestors ship Until Now Dr who lives Strong Among All Other Native Doctors, There Have Never Been Any Form Of Impossibility Beyond The Control Of Dr Obodubu. It Doesn't Matter The Distance Of The Person With The Problems Or Situation, All You Have To Do Is Believe In The Native Obodubu charms Casts That Works, He Always Warns Never To Get His Charms Casts If You Do Not Believe Or Unable To Follow His Instruction. It Is The Assignment Of The Native Doctor Obodubu To Offer Services To Those In Need Of Spiritual Assistance Not Minding The Gravity Of Your Situations Or Distance As Long As Water, Sea, Ocean, Lake, River Sand etc. Are Near You, Then Your Problems Of Life Would Be Controlled Under Your Foot. If You Need Any Spiritual Help On Any of These: Get Your Lover Back Fruit Of The Womb Fibroid Business Boom Financial Breakthrough Get Rich Without Ritual 07059225064 Do As I Say Bad Dream Promise And Fail Epilepsy Spiritual Attack Land/Court Case Mental Disorder Political Appointment Visa Approval Cancer Examination Success Spend And Get Back Good Luck Natural Health Hypertension Diabesity (Diabetic+Obesity Stroke Sickle Cell Impotency Win Court Case Promotion At Work Commanding Tone Protection Ring Marriage Success Love Ring Favour Ring Recover Lost Glory Spiritual Power For Men Of God Travel Success Ring Job Success Lotto/Pool Win And Many More. Make Haste To Call Dr Obodubu Monday On +2347059225064. Or Mail Him to babadoctorobodubuspiritualhome@gmail.com For Spiritual Problem Today And You Will Surely Get Solution To All Your Predicament. Email: babadoctorobodubuspiritualhome@gmail.com
 1 2 3  

Financial News. Simplified


Knowledge Center


Money Simplified Guides (FREE)


Mutual Fund Fact Sheets


Tools & Calculators