SIP Vs Top-up SIP: Despite being a market-linked scheme, people like SIP a lot. The main reason for this is the long-term returns and features of SIP. Money is invested in mutual funds through SIP. In terms of investment, financial advisors say that if you want to save a lot of money in the long term, then invest in a place where you get returns that beat inflation. SIP is one of those options.

Being market-linked, you do not get guaranteed returns in this scheme, but experts consider its average return to be 12 percent in the long term. Due to the benefit of compounding, there is every possibility of creating a big corpus from a long-term SIP. But if you put an annual top-up in this SIP, then you can get double the return than what you have thought and fill your account with money. Know how here.

Understand the calculation on SIP of ₹5000
Suppose you start a regular SIP of ₹5000 and run it for 20 years, then you will invest a total of 12,00,000 rupees in 20 years. In such a situation, if you calculate according to a 12 percent return, then you will get ₹37,95,740 as interest. In this way, you will get a total of ₹49,95,740 in 20 years.

Top-up will double the profit.
If you start a SIP of ₹5000 and apply a top-up of 10 percent on it every year, then you can accumulate a fund of about 1 crore in 20 years. Top-Up SIP is a facility in which you can add some amount to your regular SIP. For example, suppose you start a monthly SIP of Rs 5,000, then after one year increase it by 10% of Rs 5,000, i.e. Rs 500. Now your SIP will become Rs 5,500. Next year you have to increase it by 10% of Rs 5,500, i.e. Rs 550. In this case, your SIP will become Rs 6,050. Similarly, you have to add 10% of the current SIP amount to it every year.

If you start a SIP with Rs 5000 and then apply a top-up of 10% annually, then in 20 years you will invest a total of Rs 34,36,500. But the interest on this will be Rs 65,07,858. In this case, in 20 years you will have Rs 99,44,358, i.e. about Rs 1 crore. That means you can make double the money that you were thinking of making through a regular SIP of Rs 5,000, by applying an annual top-up of 10 percent.