Did You Know About Step-Up SIP ? Do you want something additional or just normal that everyone else get? Whether it’s your physical work out or engine oil or learning curve, you’ve always got to add a little ‘something’ to get more mileage… The Mantra: Systematically Increasing your investments in Systematic Investment Plans! – Helps you achieve your financial goals earlier. “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” - Warren Buffet Your income is moving up over time and therefore your static SIP does not provide for your additional saving capacity. Equity mutual funds have emerged as an intelligent way of creating wealth in the long run due to compounding benefit. If you use systematic investment plans (SIP), you also get the benefit of rupee cost averaging (RCA) and can gather Units in a disciplined way. What RCA(rupee cost averaging) does is to reduce your cost of holding the mutual fund units over a longer period of time. In fact, SIP works very well when there is volatility in the market since it is almost impossible to perfectly catch the highs and lows of any stock. A static SIP refers to a SIP where the monthly contribution remains constant through the life of the SIP. So whether you run the SIP for 10 years or 20 years, Now, there is a problem here! Your income levels do not remain the same over time. Normally, your income is moving up over time and therefore The answer to this challenge can be a step-up SIP. A step-up SIP is the same as a static SIP in all respects; the only difference being that the For example, if you are contributing Rs10, 000 in your SIP, you can step it up by 10% each year. So your monthly SIP contribution will be (Year 1 – Rs10, 000/, Year 2 – Rs11, 000, Year 3 – Rs12, 100, Year 4 – Rs13, 310 and so on). Step-up SIP, also popularly known as top-up SIP, is an automated facility through which SIP contribution can be increased by a predetermined fixed amount, or a fixed percentage, at periodic intervals in line with your financial goals and level of income. “Step-up SIPs allows investors to automate their SIP contribution and increases in sync with their expected growth of income.