MANY investors restrict their mutual fund investment options to a systematic investment plan (SIP), however, there is an additional feature of adding a top up that can add a lot of value to your investment. A careful look at this aspect and its practical implications will help the investor to make better use of this facility.

Nature: A top up for an SIP is a separate facility, whereby investors can increase the amount of the SIP instalment by a fixed sum at predefined intervals. This means that while the original SIP process continues, there is the facility to increase the amount of the investment. The investor can be flexible in terms of his investment when the need arises and, hence, if there is the facility available to actually increase the investments, it can take care of additional investments being planned. The important point to note is that not all funds actually provide this facility.

Minimum amounts: The lower the minimum amount required for a top up facility, the better it is for the investor in terms of flexibility. Thus, if investors find that the minimum amount is just Rs 500 or Rs 1,000, they will be able to ensure that they can begin their top up for the amount that they require. Also, in most cases, once the details of the top up facilities are given to the mutual fund, they cannot be modified. So, if there are any changes required, this has to be cancelled, and a fresh application needs to be made.

Frequency: Usually there are different frequencies at which the top ups can be made based on the periodicity of the SIP , like for a monthly SIP , the frequency of being able to make the top up is every half year, and for a quarterly SIP , it is once every year.

This also makes the applicability and use of the top up easier for the investor. A point that also needs attention is the default option mentioned because this is another indicator as to when and how any further action is possible for the investor on this front.

Extension: Ultimately, the investor wants to ensure that their investment has the facility of a top up. This might not match with the position that is offered by the mutual fund. So, one has to see the schemes that actually will be covered by the SIP and whether the fund is included in that particular list. If all the funds where the SIP facility is available are covered, then the investor can ensure that they are able to change their investments as required.