How India invests in SIPs
Systematic Investment Plan (SIP) is a convenient and a great way to get started with investing in mutual funds. Setting up an SIP offers an opportunity for investors to adopt a disciplined approach to investing.
Steady rise in SIP Accounts and Monthly SIP Contributions:
There is a healthy trend of the total number of outstanding SIP accounts (total SIP accounts that are active) and also the SIP contribution is increasing year on year. [1] As of June 2024, total SIP AUM stood at around 20% of the overall Mutual Fund industry AUM.
Average SIP Amount per account:
However, it is interesting to see that average SIP amounts per account have been fairly uniform at around 2,200-2,500 INR. For investors to fully reap the benefit of SIPs over a long period of time, it may be a good idea to consider stepping up their SIP amounts in line with the rising income levels.
Importance of stepping up your SIP Amounts:
As your income level rises, it may be a good idea to step up the SIP investment amount. A gradual increase in the SIP contribution may potentially lead to an accumulation of higher corpus in the long term as you can see below:
Step Up SIPs provide a great way to structure your investment amounts as your income levels rise. This may offer a strategic way to leverage your growing income for potentially higher returns over the long term.
This may allow an investor to adjust the investment amount according to their financial situation. This flexibility makes it easier for you to manage your investments.
There are ways for you to step up your SIPs. One way to manually step up the SIP amount is to think about SIP investments as a percentage of your salary. As your salary increases, the SIP amount contributed also increases proportionally.
The other way is to set the SIP with a “step up” option, offered by different investment platforms. You can just select the date, percentage by which you want the SIP amount to increase and then confirm your SIP update.
Source:[1]: AMFI Monthly Note June 2024
Mutual Fund investments are subject to market risks, read all scheme related documents carefully
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Published on Aug 28, 2024
