Top-Up Vs New SIP: What To Do If You Got A Mid-Year Bonus Or Hike
Got a mid-year bonus or salary hike? Here’s how to make the most of it by choosing between investing more money in an existing SIP or starting a new one, based on your financial goals.
A mid-year bonus or salary hike could be a suitable opportunity to boost your investments. Mutual fund systematic investment plans (SIPs) are often preferred by salaried employees for long-term wealth accumulation with small investments every month. SIPs offer the flexibility of increasing your investments as per your needs anytime during the tenure. So, when you get a mid-year bonus, investing a sizable amount could help you achieve your financial goals in a shorter duration.
However, it could be confusing for many whether to top up their existing SIPs or to invest in a new plan. Both choices have their advantages and limitations. Your decision should depend on your goals, current portfolio and comfort level with associated risks.
Here’s a breakdown to help you make the right call:
Toping-Up Your Existing SIPs
If you already have SIPs linked to long-term goals like retirement, children’s education, or buying a house, increasing your contribution to these plans might make more sense.
Why Top-Up Works:
No extra paperwork: You’re just increasing the amount you’re already investing.
Aligned with your goals: You speed up the progress towards your financial targets.
Compounding benefits: More money invested earlier means better compounding in the long run.
Most fund houses offer a SIP top-up or SIP step-up option. You can set this up to automatically increase your monthly contribution either immediately or at regular intervals.
When Not To Top-Up:
If your existing SIPs are classified as ‘high-risk’ investments and you want to reduce exposure.
If your financial goals are already on track and you don’t need additional funds.
Start A New SIP
If you’ve just received a decent bonus or a salary hike, it could also be a good opportunity to begin investing toward a new goal, something that’s not currently covered in your existing plan.
Why New SIP May Be Better:
Goal-specific investment: Want to buy a car in three years? Or take a sabbatical? A new SIP helps create a focused fund for that.
Better diversification: You can pick a different type of mutual fund — for example, balanced or thematic — that isn’t already in your portfolio.
More control: You can set a different duration, amount, or risk level based on the new goal.
When To Avoid A New SIP:
If you're juggling too many SIPs already and managing them feels overwhelming.
If you don’t have a new specific goal and are better off strengthening your existing portfolio.
Which One Should You Choose?
There’s no one-size-fits-all answer. But financial advisers often suggest following a standard rule:
Opt for a top-up if your current SIPs are performing well and are better aligned with your goals.
Start a new SIP if you have new goals or want to diversify your portfolio by adding unexplored asset classes.
A bonus or salary increase is a great opportunity, but it’s most useful when tied to a clear financial roadmap. Before making a decision, review your overall asset allocation, risk appetite and financial goals.
