How does SIP top-up work

A systematic investment plan ( SIP) helps you to invest a fixed amount at periodic intervals (daily, monthly, quarterly) over a period of time. As the investor’s income goes up, he is able to set aside a higher surplus for investing.

He can use this surplus to start a new SIP or top-up an ongoing SIP using the SIP top-up facility provided by many mutual funds. The investor can increase the amount of SIP instalment by a fixed amount at pre-defined intervals. This enhances the flexibility of the investor.

Conditions
Top up can be made only in multiples of specific denominations (eg Rs. 500). The facility can be availed only for SIPs through direct debit or ECS mode.

Form
A specific form for SIP top-up must be filled in this regard. Forms are available for download on the fund house’s website.

Information
Details of the investors (name, folio), existing SIP (scheme details, SIP frequency, SIP amount) must be entered. Top up amount, frequency of top up installment should be mentioned. All holders should sign the form if the mode of holding is “Joint”. Some AMCs also require bank mandate to be provided in the SIP top-up form.

Submission
Duly filled up form should be submitted at the AMC office or Investor Service Centre designated by the AMC.

Process
After submission of the SIP top-up form, it takes 30 days to process and make the top-up effective.
Points to note
1. Separate top up form needs to be filled for each registered SIP.
2. A time gap as specified by the AMC must be maintained between two consecutive top-up requests (typically 3-6 months).
(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)