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Systematic investment plan (SIP) is a process of investing in mutual funds. “If you want to increase your contribution, it can be done through the same medium with which the original SIP was started or you can start a fresh SIP for an additional amount," said Vijay Kuppa, co-founder, Orowealth. You can use the step-up SIP feature to increase your contribution. “With this, your contribution will increase automatically according to a pre-decided amount and pre-decided periodicity. Step-up SIPS basically cover 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- ₹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 one-time mandate, then the additional amount should be within the mandate limit and there is no additional paperwork required," he added.
Experts suggest that you should focus on timing, as well as your goals and corpus available before taking a decision. “There may be times when existing corpus may not be enough to cover the goals with the remaining SIP instalments, which in turn will require you to increase the SIP amount. If the market outlook is weak, it is not advisable to stop the SIP completely. Rather, it can be diverted to some other asset class which is completely uncorrelated or continued to take advantage of the lower NAV on account of downfall. Thus, it is advisable to monitor the portfolio and the goal," said Kuppa.
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