What is Top Up SIP and how does it work

Mutual fund Systematic Investment Plan (SIP) is an effective and convenient way which may create wealth in the long term. By contributing a fixed amount at a fixed frequency in mutual funds – say, daily, weekly, fortnightly, monthly or quarterly – you can take advantage of price volatility in the stock market through Rupee cost averaging of acquisition costs known as NAV. Out of the various frequencies, monthly SIPs are the most preferred and popular one.

With times, your income levels change due to annual increase in salaries or business income etc., therefore, you may have more surplus money available to invest. A SIP Top-up allows you to increase the SIP amount annually. The SIP top-up amount can be specified as a percentage or a fixed amount every year over the original SIP amount.

Let us understand Top up SIP through an example –

Pradip wants to start a monthly SIP to build his retirement corpus. He decides to start a monthly SIP of Rs 20,000 for 20 years in a multi-cap fund and expects minimum 11% return over the SIP tenure.

By investing Rs 20,000 each month with assumed return of 11% p.a., Pradip can create a corpus of approx Rs 1.75 Crores against an investment of Rs 48 Lakhs.

What if Pradip decides to Top-up his monthly SIP investment amount by 10% every year?

He can create a corpus of approx Rs 2.82 Crores against an investment of Rs 93.60 Lakhs. That means an additional corpus of over Rs 1 Crore gets created by increasing the monthly SIP amount by only 10% every year.

(Notes: 10% Top-up amount on Rs 20,000 SIP means that every year the amount will increase by Rs 2,000. For example – First year Rs 20,000, second year Rs 22,000, third year Rs 24,000 and so on…)

SIP typeAmountAnnual Top Up %SIP TenureTotal Amt InvestedCorpus Value at end
Normal SIP20,000020 yrsRs 48.00 LakhsRs 1.75 Crores
SIP -Top Up20,0001020 yrsRs 93.60 LakhsRs 2.82 Crores

What are the advantages of Top up SIP

Convenient way to fight inflation – Top-up SIP helps you keep pace with the rise in inflation. As inflation consistently erodes the value of your money, it is advisable to raise the SIP contributions equivalent to the inflation rate or more. The current average annual inflation rate in India is approx 7.5%. Therefore, if you top up your SIP contributions by at least 10%, it’s fine.

Helps save more in tandem with rising income – We expect our salaries or business income to rise annually by a certain percentage. If you Top-up your SIPs annually by the expected increase in your income then it auto adapts to your rising income.

Operational convenience – Top up SIP works on an auto pilot mode – it helps you save from the hassles of opening new SIP accounts every time you want to increase your SIP instalment. Starting a new SIP can be tedious and managing multiple SIP accounts can be cumbersome. Top-up SIP helps you increase the SIP amount in the same scheme and folio automatically based on the option given by you while signing up the SIP Top-up form.

Can help you reach your financial goals faster – SIP Top-up can help help you reach your financial goals faster as you can accumulate the goal target amount sooner than the projected time frame. This is possible as you are increasing your SIP investments every year by a certain percentage.

Important points to note for Top-up SIP

  • Investor has to opt for the Top-up SIP option while enrolling for the SIP facility.
  • Most AMCs allow minimum Top-up amount as Rs. 500 or in multiples of Rs. 500. Some AMCs also allow a percentage increase every year.
  • Once enrolled, the SIP Top-up details cannot be modified. In case you want to make any changes, you will have to stop the existing SIP and enrol for a new SIP with Top-up option.
  • Generally Top-up SIP is allowed in all such schemes in which SIP is allowed.
  • No need to fill up separate ECS debit mandate form to avail Top-up option in SIP.


A SIP Top-up can help you build a superior corpus faster and accelerate the journey to reach your goals sooner. It also helps your annual savings keep pace with inflation while striking the right balance between discipline and flexibility.

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