Investing in mutual funds through a Systematic Investment Plan (SIP) is a smart strategy. SIP offers a flexible way to grow your wealth over time. To maximise your returns and reach your financial goals faster, it is important to increase your SIP amount every year. Let’s explore the benefits of doing so and how it helps make more money.
Why should you increase your SIP every year?
SIPs benefit from the power of compound interest. By increasing your SIP contribution, you boost the compounding effect. This means you earn returns on your initial investment, the new contributions, and the gains accumulated over time, maximizing your total growth. According to Groww, increasing your SIP amount helps you earn returns not only on your initial investment but also on the accumulated interest.
Inflation reduces the purchasing power of your money over time. To keep up with this, you need to increase your investments. Traditional savings schemes often can’t match inflation, but increasing your SIP helps protect the real value of your savings.
Whether you’re saving for a vacation, your child’s education, or a comfortable retirement, increasing your SIP helps you achieve these goals faster. With higher contributions, you can accelerate your progress through the benefits of compound interest.
As your income grows, it’s important to adjust your investments. Increasing your SIP in line with your rising income boosts your finances and ensures you stay on track to meet your savings goals.
Increasing your SIP regularly also helps build a habit of disciplined saving. It encourages you to prioritize savings over spending and stay consistent with your investment strategy. Committing to higher SIP contributions can help you achieve even more than your initial goals, providing extra financial security.
- Choose a Platform: Use apps like Groww, Zerodha, or your bank’s portal.
- Complete KYC: Submit PAN, and Aadhaar, and verify via OTP or in person.
- Create an Account: Register with your email and phone number.
- Select a Scheme: Pick a mutual fund based on goals and risk.
- Enter SIP Details: Set the amount, tenure, and payment date.
- Set Up Auto-Debit: Link your bank account for monthly deductions.
- Confirm: Review and start your SIP.
- Track Performance: Use the platform to monitor and modify as needed.