I plan to start an SIP from next month. While registering online, I was asked if I’d like to select the top-up option. When I get a salary hike, is it advisable to top-up the current SIP or start a new one?
—Vidhi Kumari
SIPs have traditionally referred to a steady investment of the same amount of money on a particular date every month. For example, one would invest ₹5,000 evenly split between two mutual fund schemes on the 5th of every month for, say, 10 years. However, these days, there have been many changes to this rather static notion of SIP thanks to the advent of digital platforms as well as AMCs adopting digital means of transactions. As a result, SIPs do not need to be for a particular tenure. Another change is the one that you have indicated—SIPs can now periodically change the amount based on some preset rule.
