Reasons why your SIP investment must pace with your salary hikes

Reasons why your mutual fund(SIPs) investment must pace with your salary hikes

In simple words, it means as your salary increases you should increase SIPs accordingly. For example, in your early earning years if you earned Rs 30,000 in a month. You invested Rs 10,000 a month via mutual fund SIPs. That an investor invests 33 percent of his income MFs (mutual funds). Fast forward to the present, now you earn around Rs 3 lakh a month. But you only run a monthly SIP of Rs 25,000. This translates to around 8 percent of his income, you should keep that in your mind, if your earning increases your investment should also increase accordingly. In this way, you will be going to earn a better return and save money for your future.

On the other hand, it is also important that should make a balance between your investment and your expenditure as due to increased financial and family commitments, it becomes difficult to increase your investment substantially. But mostly people themselves don’t feel the need to do so. They feel that once they started a SIP, their job is done, now they don’t have to do anything.

That is not true, if your income (or salary) grows regularly, then why not your investments?

And that is the reason why experts say to increase your SIP amount by at least the rate at which your income grows.

You should keep increasing your investment percentage every year for better investment returns.

Your SIP investment should match your income for example, when you earn Rs 10000 you invest 1000 and when our investment is Rs 30000  you should invest Rs 3500, and when you earn Rs 300000, your SIP investment amount should increase accordingly. There is no fixed percentage that should increase your SIP investment. But there should be growth in your SIP investment same as the salary you earn.

When you learn this art of investment your return on investment will be increase and that is very beneficial for you.