SIP Top-Up vs SIP Calculator :Systematic Investment Plan (SIP) is a better way to invest to grow your wealth in the long term. For smart investors, while it helps in reducing the risk in the portfolio in the long term, it also works for wealth creation. But if you become a smarter investor while doing SIP then your profit can increase a lot. Top-Up SIP is a better option to bring a little more smartness in investment.
Best SIP Return: Top smallcap fund with high rating, made Rs 5 crore from SIP of Rs 10 thousand, left behind the giants in giving returns
What is Top Up SIP?
Top up SIP is also a facility available in mutual funds, through which you can increase your existing SIP investment every year. This increase can either be some percentage of the SIP amount or it can also be a fixed amount. If you have started SIP with Rs 5000, then after 1 year you can add 10%, 20% or 25% or even more of Rs 5000. You can do the same on completion of every year.
For example, if you have topped up 10 percent, then after 1 year the amount deposited every month will be Rs 5500. If this option continues, next year 10 percent of Rs 5500 i.e. Rs 550 will be added and then the monthly investment will become Rs 6050. This sequence will continue further also.
SIP Star: Amazing scheme with 4 star rating, SIP of Rs 10,000 turned into Rs 1 crore, money increased 12 times on one time investment
SIP vs Top Up SIP
40 year old Suresh has opted for SIP of Rs 5,000 every month for the next 20 years for his daughter’s marriage. He planned to invest only Rs 5000 in SIP every month for 20 years.
On the other hand, Rahul, who worked with him in the office, also chose the option of SIP for the next 20 years. He also decided that every year, whatever increase in income occurs, he will invest 10 percent of it in SIP top up.
When both of them studied the return charts of equity mutual funds, they saw that there are many such funds which have consistently given returns of 12 to 15 percent or more during the last 15 to 20 years. Considering inflation, he has considered the estimated return on his investment to be 12 percent.
SIP Return in Oldest Fund: Tata Group’s oldest scheme did wonders in SIP, daily savings of Rs 100 turned into Rs 2.67 crore
Case-1: Regular SIP
Monthly SIP: Rs 5,000
Duration: 20 years
Estimated return: 12 percent
Total investment: Rs 12 lakh
SIP value after 20 years: Rs 49,95,740 (about Rs 50 lakh)
Profit: Rs 37,95,740 (about Rs 38 lakh)
Case-2: SIP Top-up
Starting monthly SIP: Rs 5,000
Duration: 20 years
Estimated return: 12 percent
10% top up every 1 year
Total investment: Rs 34,36,500
SIP value after 20 years: Rs 99,44,358 (about Rs 1 crore)
Profit: Rs 65,07,858 (about 65 lakhs)
Most Profitable IPO: 7 highest earning IPOs this year, investors got 110 to 254% returns, these 5 suffered the highest loss.
What do you get from top-up SIP?
In this calculation you can see that if you top up SIP, the total value of investment after 20 years will be around Rs 1 crore. Whereas the total investment made by you is around Rs 34.50 lakh. In this respect, you got a profit of around Rs 65 lakh. Whereas in regular SIP, after 20 years you will get around Rs 50 lakh, which is around Rs 38 lakh more than the investment of Rs 12 lakh made by you. Secondly, if you have set a target of raising money for your daughter’s wedding, that target will be met before time.
(Note: We are not advising investment in mutual funds here. Here is an information based on SIP calculation. There are risks in the market, so consult an expert before investing.)
