1. What is a SIP top-up facility?

SIP top-up is a fa cility wherein an investor who has enrolled for SIP , has an option to increase the amount of the SIP installment by a fixed amount at pre-defined intervals.

Thus, this facility en hances the flexibility of the investor to invest higher amounts during the tenure of the SIP .

2. How does it work?

A top-up facility in your SIP allows you to increase your monthly contribu tion in an ongoing SIP .

For instance, if you in vest, `10,000 every month in an SIP and wish to add `1,000 every month, at the end of each fiscalcalen dar year or every six months, you can do so, us ing the top-up facility.

While some fund houses call it top up, some others call it SIP Booster or SIP step-up facility . Most prominent fund houses offer this facility to investors. Fund houses suggest that the top-up amount should be a minimum of `500 and in multiples of `500 only.

3. At what frequency can you top up?

A top-up can be made either when you start your SIP or at a subsequent date by writing in the specified format to the fund house.Mostly , fund houses allow you to top up your monthly SIP at half-yearly and yearly intervals. If you are running a quarterly SIP , then you can top up at yearly intervals only .

4. Why do financial planners recommend an SIP top-up?

Financial planners suggest in vestors should opt for a top-up facility , as it automatically accounts for inflation and takes care of an increase in income like an annual salary hike. Since most organisations increase salaries once every year, they suggest investors could top up their SIPs annually .

Many salaried retail investors run SIPs to meet their long-term financial goals such as buying a house, kids education and marriage or retirement.With every increase in salary , they tend to increase their SIP amount. However, every time you get a salary hike and wished to invest more through SIPs, you are forced to start a new SIP . With the top-up facility this is taken care of.However, all fund houses do not offer this facility, and hence, investors need to check with their brokers which fund houses offer this facility .