How to Change SIP Amount?

Financial goals, life changes, salary increments, or unexpected expenses can all make you wonder, “Can I change my SIP amount?”

The short answer is yes. While you can change your SIP amount, it requires understanding the right steps and options available. Let’s learn how to change SIP amount, why you might want to, and the best ways to go about it.

Can We Increase SIP Amount in Between?

Yes, you can increase the amount in most cases. 

As your financial situation improves, you may want to invest more each month to take advantage of the power of compounding. However, while you can increase your amount, doing so mid-course might require you to adjust the structure of your SIP through options like SIP top-ups. 

Top-ups are an excellent option for salaried individuals who receive regular increments, as this helps you automatically adjust your contributions without taking any extra steps. It’s a simple yet effective way to align your SIP with your evolving financial goals.

📝Note: Make sure you specify the top-up details at the time of starting your SIP — you can’t modify these settings later (in most cases) without altering your SIP entirely.

Why Should You Modify Your SIP?

Modifying your SIP can be a strategic way to maximise returns and stay aligned with your evolving financial needs. 

Here’s why modifying your SIP might be a good idea —

• Adapting to Income Growth: As your income increases, it’s a good idea to raise your SIP contributions. This allows you to save more and reach your financial goals faster, taking full advantage of the power of compounding.
• Aligning with New Financial Goals: Adjusting your SIP allows you to match your investments with the changing financial goals and ensure you're on track to meet them.
• Coping with Cash Flow Changes: Life is unpredictable — expenses or a drop in income may require you to reduce your SIP contributions temporarily. Modifying your SIP amount during such times can help ease your financial pressure without interrupting your long-term investment plan.

When Should You Consider Modifying Your SIP?

Knowing when to modify your SIP can significantly impact your long-term wealth-building journey.

Here are some situations where adjusting your SIP makes sense —

• After Reaching a Financial Milestone: Once you've achieved a specific goal, like saving for a vacation or buying a car, it might be time to redirect those SIP contributions towards a new, bigger goal, such as retirement or a child's education fund.
• During Market Corrections: When the market corrects itself (dips), increasing your SIP can be a smart move. By doing so, you buy units at a lower price — this could help improve your returns when the market rebounds.
• In Response to Financial Setbacks: If your income decreases or you face unexpected expenses, you might need to temporarily reduce your SIP. This ensures you stay invested without stretching your finances too thin.

How to Change SIP Amount?

When it comes to changing your SIP amount, there are two primary ways to do it: via top-ups or policy cancellations. However, some brokers may also offer you a chance for modification — we will cover this as well.

Let’s see each method to understand how it works and which one is right for you.

1. Top-Up SIPs

A top-up SIP (also known as a step-up SIP) allows you to gradually increase the amount of your monthly investment after a fixed interval, such as every year or every 6 months. This option is ideal if your income is on the rise or you expect a financial windfall.

Here’s how it works —

Example

Sakshi opts for a 15% top-up in her SIP amount (AED 2,000) each year, while Amir chooses a fixed increase of AED 300 annually.

Here’s how the SIP amounts will change over the years —

Breakdown of the Calculations

• Sakshi's SIP (15% Increase)
  • Year 1: AED 2,000
  • Year 2: AED 2,000 × 1.15 = AED 2,300
  • Year 3: AED 2,300 × 1.15 = AED 2,645
  • Year 4: AED 2,645 × 1.15 = AED 3,042

• Amir's SIP (AED 300 Fixed Increase)
  • Year 1: AED 2,000
  • Year 2: AED 2,000 + AED 300 = AED 2,300
  • Year 3: AED 2,300 + AED 300 = AED 2,600
  • Year 4: AED 2,600 + AED 300 = AED 2,900

As we can see, Sakshi’s SIP grows at a faster rate compared to Amir’s fixed increase due to the compounding effect of the percentage increase.

2. Policy Cancellation and Starting Fresh

What if you want to decrease your SIP amount or make a significant change to your monthly contribution? Unfortunately, you cannot reduce your SIP amount through the top-up feature. In such cases, the most viable option is to cancel your current SIP and start a new one with the desired amount.

Here’s how the process works —

• Cancel your existing SIP: You can do this by submitting a request to the fund house. This can be done online through their website or mobile app. Most providers also allow you to complete the process by filling out a physical form.
• Start a new SIP: Once the old SIP is canceled, you can initiate a new SIP with the amount that fits your current financial situation.

However, before making this decision, it’s essential to be aware of potential exit charges or exit loads. Some mutual funds impose a fee if you exit your SIP before a certain period (usually one year). 

So before opting for this route, it’s crucial to factor in these charges as well as the impact on your long-term investment goals.

💡Tip: If you are thinking of reducing your SIP amount due to financial constraints, consider speaking with a financial advisor. They can guide you on whether temporarily pausing your SIP or adjusting the amount is a better strategy in the short term rather than completely cancelling it.

3. Modify SIP Installments

Whether you can modify your SIP also depends on the broker. Some brokers may allow you to adjust your SIP amount, while others may not. 

In case your broker provides a facility for the same, here's how you can modify your SIP —

1. Visit the broker's website
2. Go to the ‘Mutual Funds’ dashboard and select ‘SIPs’
3. Select the SIP you want to edit
4. Choose the ‘Edit/Modify SIP’ option

Frequently Asked Questions