Do you know about 6.28 crore (62.8 million) SIP accounts investors regularly invest in Indian Mutual Fund schemes? This is a testament to the growing popularity of Systematic Investment Plans (SIPs) in India as a reliable investment option.
But that’s not all – the Average Assets Under Management (AAUM) of the Indian Mutual Fund Industry for March 2023 is about ₹40,04,638 crore. This indicates the significant role that mutual funds play in the Indian investment landscape.
To stay ahead in the game, it is essential to consider new and innovative investment strategies. One such strategy that you might want to explore is the Step Up SIP. Step up SIP investment method has the great potential to maximize returns which in return helps investors achieve financial goals more quicker. Let’s dive in and explore its potential.
What is the Step Up SIP?
Step Up SIP (Systematic Investment Plan) is a unique and flexible investment strategy that allows investors to gradually increase their investment amount over time. Unlike traditional SIPs, where investors contribute a fixed amount at regular intervals, Step Up SIPs offer the flexibility to increase the investment amount periodically.
Imagine starting with a modest amount that fits your budget and gradually increasing it as you get promoted, switch jobs or your side hustle takes off. This investment method offers investors to keep up with financial goals without making big jumps in their investment amount all at once.
So, if you’re looking for a smart and underrated investment method, Step Up SIP may be the right fit for you.
How does Step Up SIP work?
Imagine having to do calculations manually with a pen and paper. It can be so time-consuming and often leaves you with a chance of human error. But with the Step Up SIP calculator, you can sit back and relax while it does all the work for you.
In Step Up SIP, investors have the option to increase their investment amount gradually over time. This means that investors can start with a smaller investment amount and gradually increase it as their income grows.
Follow the below-given steps to step up SIP:
- First, visit the official website of your mutual fund.
- Then, find and open the option for the Step Up SIP calculator. Once you’re there, enter the monthly amount you want to invest in the mutual fund.
- Next, enter the expected rate of return (per year) for this mutual fund.
- After that, provide your mutual fund tenure and enter the annual step-up rate/amount.
- Click on “Calculate” for the result.
It’s that simple.
As the calculation output, you’ll receive the invested amount, which is the sum of all the SIP investments you made, an approximate amount of gain you’ll generate from your investments, and the total value of your corpus once the fund matures.
For example, an investor starts with a monthly investment of Rs. 5000 in Step Up SIP. After a year, the investor can increase the investment amount to Rs. 6000 per month, and after another year, the investment amount can be increased to Rs. 7000 per month, and so on.
Step Up SIP Calculator: A Useful Tool for Planning Investments
To calculate step-up SIP you can use a Step up SIP calculator. This tool helps you calculate your investment amount and the expected returns based on your investment tenure, expected rate of return, and step-up percentage.
Check StockPe’s SIP Calculator: SIP Calculator
What is the use of the Step up SIP calculator with inflation?
A step-up SIP calculator with inflation can also be used to calculate the investment amount required to meet your future financial goals adjusted for inflation. It helps you plan your investments effectively and achieve your financial goals with ease.
For example, let’s assume an investor wants to invest Rs. 5,000 per month in a Step up SIP for the next 20 years, with an annual increase of Rs. 1,000 per year. This helps the investor to decide what amount you need to save to achieve future financial goals.
A Step-by-Step Guide to How to Step up SIP
To Step up SIP follow the below-mentioned steps:
- First and foremost, select a mutual fund scheme that provides step-up SIP.
- Select the amount you want to invest and the step-up percentage.
- Fill out the application form for SIP.
- Submit the application form along with all the necessary documents.
- Choose an auto-debit feature, and the amount will be deducted from your bank account for the monthly SIP investments automatically.
- Check investments regularly and make changes as required.
What is the Step up Amount in SIP?
The Step up Amount in SIP means a predetermined incremental increase in an investor’s investment amount in a systematic investment plan (SIP) over time. Initially, the investor starts with a lower investment amount, which they gradually increase as their financial situation improves.
With Step Up SIP, investors can accumulate a larger corpus for their long-term financial goals and adjust their investment amount according to their financial situation. The Step up Amount in SIP provides investors with the flexibility and scalability to invest in a disciplined and systematic manner, making it an excellent investment strategy for achieving long-term financial objectives
Things to Keep in Mind Before Starting a Step-up SIP Investment
Starting a Step-up SIP is a smart investment strategy for those who want to increase their investments over time. However, one should keep a few things in your mind before starting an investment.
Analyse your current financial situation: One must analyse their current financial situation before starting an investment. It is recommended to check your monthly expenses and hence later fix the amount of investment.
Additionally, you should also research and choose the right mutual fund that aligns with your financial objectives and investment style.
A step-up SIP can be an effective tool to accumulate wealth and achieve your long-term financial goals. So, start investing in a step-up SIP today and secure your financial future.
In conclusion, Step up SIP is a highly effective investment strategy that offers numerous benefits over Traditional SIP. By gradually increasing the investment amount over time, investors can achieve their long-term financial goals faster and with less risk. If you strategically invest and plan your Step up SIP investment then you can easily make the best of it.
However, the calculation is not as simple as it seems but if you use a Step-up SIP calculator then it can help investors accurately estimate. One must need to make the investment amount to meet their financial goals while taking inflation into account. With its flexibility, diversification, and inflation-adjusted returns, Step Up SIP is a wise choice for anyone looking to grow their wealth over time.
Frequently Asked Questions
Can you start a Step up SIP with a small investment amount?
Yes, you can start a Step up SIP with a small investment amount. The minimum investment amount varies from one mutual fund company to another and can range from as low as Rs. 100 to Rs. 500.
Can I change the Step-up SIP amount once I have started investing?
Yes, you can change the Step-up SIP amount once you have started investing. However, one must check the terms and conditions of your mutual fund provider.
Who can invest in a Step up SIP?
Anyone eligible to invest in a regular SIP can also invest in a Step up SIP. This includes individuals, HUFs, NRIs, and corporate entities.
How do I start a Step up SIP?
You can start a Step up SIP by selecting a mutual fund scheme that offers this option and providing the required details such as the SIP amount, frequency, and duration.
Can I change the Step up SIP amount or frequency later?
Yes, most mutual funds allow you to make changes to your Step up SIP amount or frequency at any time during the tenure of the investment.
Is there any limit to the number of times I can increase the SIP amount in a Step up SIP?
No, there is no limit to the number of times you can increase the SIP amount in a Step up SIP. However, some mutual funds may have specific rules regarding the maximum increase allowed.