E-Paper
Increasing your SIP limit
You can make use of Systematic investment plan (SIP) to build your funds for your financial goals such as retirement.
How to go about it
Systematic investment plan (SIP) is a process of investing in mutual funds that are meant to bring in some discipline in your investment regime without having to worry about the timing of taking the call. “If you want to increase your contribution, it needs to be done through the same medium (AMC or an intermediary) with whom the original SIP was started or you can start a fresh SIP for an additional amount,” said Vijay Kuppa, co- Founder, Orowealth. You can also use the step-up SIP feature to increase your contribution. “With this, your SIP contribution will be increased automatically according to a pre-decided amount and pre-decided periodicity. Step up SIPs basically covers your investment for the increment in disposable income,” said Omkeshwar Singh, head – RANK MF, Samco Securities.
Rules and process
There are no rules regarding increasing the SIP amount. “The same can be done anytime. Every asset management company has some minimum SIP criteria amount which can range from ₹100 to 1,000,” said Kuppa. You need to approach the intermediary through which the original SIP was initiated. “If the SIP was started by taking a specific mandate for ECS, then a new SIP needs to be started. However, if the SIP was started, by taking a onetime mandate, then the additional SIP amount should be within the one time mandate limit and there is no additional paperwork required if the incremental amount is within the mandate,” he added.
When is the right time to increase your SIP?
Experts suggest along with focussing on the timing, you should also focus on your goals and corpus available before deciding to increase your contribution. “There may be times when the existing corpus may not be enough to cover the goals with the remaining SIP installments which in turn will require to increase the SIP amount. If the market outlook is weak, it is not advisable to stop SIP completely. You can rather it can be diverted to some other asset class which is completely uncorrelated or SIPs can continue in order to take advantage of the lower NAV on account of downfall. Thus it is advisable to monitor the portfolio and the goal and then decide on the SIP,” said Kuppa. You can make use of SIP to build your funds for your financial goals such as retirement.
