3 Good Reasons to Increase SIP Every Year


 

Investing in mutual funds via the SIP can be the easiest way to build your savings and accumulate wealth. But if you really want to see your money grow, gradually step up your investments. It is easy to estimate how increasing your SIP amount each year can help you meet your financial goals with an online calculator. Not sure about stepping up your investments with an annual SIP increase? Here are 3 major reasons why you should do so.

 

Higher Investment, Higher Returns

 

This is a no-brainer. Obviously, the more you invest, the more you earn. It also helps to choose a mutual fund that works on the concept of compounding. This means that each year’s interest is paid on the total funds and not just your initial capital. This means you earn more as interest payments keep adding to the total capital invested. Make an informed decision as and when your income increases to raise investments using an online step-up SIP calculator. Plus, you can benefit by adding any bonuses and increments you might receive to your SIP.

 

Beat Inflation

 

People often forget about inflation while planning their financial future. Inflation tends to eat into the value of your deposited funds. It creates a situation where even though your funds are increasing, the value of your money is decreasing. The best way to fight inflation is ensure that your returns are higher than the inflation rate. And the way to do so is by increasing investment regularly by making informed decisions with an SIP calculator.

 

For example, if the average inflation rate is 7.5% per annum, the increase in your investment each year should be higher than that, say 10%. Check the SIP calculator to decide on a yearly increase to ensure such returns. Countering inflation will help you achieve your long-term financial goals.

 

Accelerate the Journey to Your Financial Goals

 

When you start early and invest smartly, you can ensure a secure financial future for yourself and your family. This means no stress when you have to pay for the higher education of your children or their marriage. It could also ensure a stress-free retired life without needing to sacrifice on your standard of living. If you want to speed up the process of meeting your financial goals, step up your yearly investments. In the long-term, the higher investment will not just benefit from compounding but also rupee-cost averaging. This will give you better returns.

 

The easiest way to decide on the size of the annual increase in investment is to use an SIP calculator. Simply feed in basic information, such as your financial goals, interest rate of your chosen mutual fund and yearly investment amount to get accurate estimates. Don’t forget to keep track of your investments so that you can tweak your strategy as and when needed to get the best returns.