Mutual Funds: Use Progressive SIP to Build Your Wealth

As the benchmark Sensex passed the 60,000 mark last Wednesday after a strong 16% rise from June lows, equity-related investments are back in favour. In fact, the month-long market rally pushed mutual fund assets under management linked to Systematic Investment Plans (SIPs) to a record Rs 6.1 trillion in July and the inflow to during the month was Rs 12,140 crore, the eleventh consecutive month. when it exceeded Rs 10,000 crore.

Experts say individuals might be reluctant to make lump-sum investments, they should consider incremental SIPs to take advantage of Rs averaging and higher compound returns in the long run. In a progressive SIP, the investor can increase the contribution at regular intervals, as this is the best way to invest regardless of market conditions.

Invest more as your income grows
Increasing the SIP is a good strategy where one can increase investments at regular intervals without disrupting current finances. It also helps you target a higher corpus in a planned way and invest more as your income grows over the years. Harshad Chetanwala, co-founder of, says this can be done in any form, adding a new SIP or increasing the amount of the SIP. “The idea should be to increase investments in funds that work well for you from a long-term perspective,” he says.

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SIP is a method to automate saving and investing while reducing market uncertainty and average investment in rupees. A progressive SIP steps it up a few notches by helping an investor not only be a disciplined saver, but also a disciplined investor who keeps up with their increasing income and financial needs.
Santosh Joseph, Founder and Managing Partner of Germinate Investor Services, says stepping up SIP as a feature is an extremely convenient and beneficial tool for a long-term investor. “Without much intervention, you automate more investments to illustrate and amplify the benefits of systematic investment. SIP scaling also allows you to avoid starting new SIPs or increase the number of ongoing SIPs,” he says.

Watch the goal period
A progressive SIP works well for investors who do not have excess funds to invest early in their career. Thus, one can start with a SIP with a lower contribution and gradually increase the investment with increasing income to match various financial goals. If the financial goal is huge, the SIP increase strategy can be used, depending on the goal period and the amount needed. “You can do it as a normal strategy knowing that the investment potential will increase over the years as the earning potential increases. It also helps you to be more disciplined and committed to your investment plan,” says Chetanwala.

SIP break in case of income uncertainty
In case of uncertainty, the normal SIP or the progressive SIP can be changed. Mutual fund houses have a “suspend SIP” option which allows an individual to suspend a SIP for one, two or three months. In a situation where the individual’s income is affected for uncertain reasons, enhanced SIPs can be redesigned and relaunched when things become normal. The key is to stay disciplined when investing through SIPs.

Even for a gradual SIP, an investor can let the regular SIP continue and stop the step-up or reduce the frequency of the step-up or reduce the amount of the step-up. “The advantage of SIP and even progressive SIP is that it is not mandatory. It is completely a convenience tool and helps you to be a better investor and manage your finances well by stopping, pausing and recalibrating SIP and Stepped SIP at your convenience, especially during unforeseen or unexpected situations. emergency,” explains Joseph.

A progressive SIP works well for investors who do not have excess funds to invest early in their careers
This smart investment tool amplifies the benefits of systematic investing
The idea is to increase investments in funds that work well for you from a long-term perspective
You can stop, pause or recalibrate SIP and Progressive SIP as needed, especially in unexpected or emergency situations

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