What does the SIP top-up center mean?
SIP top-up is a facility where an investor registered for SIP has the option to increase the value of his or her SIP Installment by a fixed amount or percentage at the times previously specified. This increase can be attributed to income and future growth.
What is the difference between a standard shower and a top-up?
In a standard SIP, investors cannot increase their contribution during their plan. If they want to increase it, they have to start a new SIP or make a lump sum. Step-up SIPs allow investors to use their SIP contribution and increase in line with their expected growth in revenue.
How does this work?
Using the additional space, the investor can increase the monthly contribution to the ongoing SIP. While some fund houses call it top-up, others call it the SIP Booster or SIP step-up area. The most prominent fund houses offer investors this facility.
Why do financial planners recommend upgrades?
Many investors who sell SIPs meet their long-term financial goals such as buying a house, children's education, and marriage or retirement. Financial planners suggest that investors should opt for additional space, as it automatically generates inflation and takes into account increases in revenue such as annual income increases. Most income earners are increasing every year which is why they are suggesting that investors can increase their SIPs every year. With a top-up center, this is taken care of.
What is the challenge of a top-up face?
The foundation of the top-up SIP predicts that investment income will increase year on year. There may be situations where costs will increase and money will fail to move faster, or there may be job losses as we have seen in the epidemic, making it difficult for the investor to rise.