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Small, Consistent SIP Increments Yield Big Wealth

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  Published in Business and Finance on Wednesday, November 19th 2025 at 12:00 GMT by Business Today

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How a Small, Consistent SIP Increment Can Turn Modest Investments into Substantial Wealth

In a recent Business Today piece titled “Mutual Fund Investment: How a 5‑Yearly SIP Increase Can Transform Small Investments into Big Wealth,” the author explores a surprisingly simple yet powerful strategy for long‑term wealth creation. The article argues that investors who regularly increase their Systematic Investment Plan (SIP) amounts—specifically by a modest 5 % every five years—can dramatically outpace the returns of those who keep their investment size static. By weaving together empirical data, behavioral insights, and practical guidance, the piece makes a compelling case for disciplined, incremental growth as the backbone of successful mutual‑fund investing.

1. The Power of Systematic Investing

At its core, the article reminds readers that a SIP is a disciplined way to invest regularly in a mutual fund. Investors earmark a fixed amount (say, ₹5,000 or ₹10,000) and purchase units every month, thereby benefiting from rupee‑cost averaging. Even if the market is volatile, this regular investing practice ensures that over time, an investor buys more units when prices are low and fewer when prices are high, smoothing the impact of market swings.

The piece emphasizes that, historically, equities have outperformed most other asset classes in the long run. By channeling money through equity‑oriented mutual funds via SIPs, an investor taps into the market’s growth engine while keeping the effort minimal. Importantly, the article underlines that “the longer the lock‑in period, the more the investor reaps from compounding,” citing a 20‑year horizon as a common benchmark for substantial wealth accumulation.

2. Why Incremental Increases Matter

While many investors set an initial SIP amount and never touch it again, the article showcases research that demonstrates the stark difference between a fixed and a progressively increased SIP. Two key points emerge:

1. Compounding is a Function of Time and Amount – Even a small rise in the monthly contribution can generate a larger stream of future returns because each incremental unit is itself a compound investment. For instance, a 5 % increase every five years means that after 20 years, the total invested amount is roughly 1.28 times the original figure. That 28 % extra, when subject to the same average annual return (say 12 % for equities), turns into a much larger final corpus.

2. Inflation and Salary Growth – The article highlights that most salaried professionals receive incremental pay raises or bonuses that could be earmarked for increasing their SIP. By aligning SIP increments with salary hikes, investors effectively keep pace with inflation and maintain real purchasing power over time. This is especially crucial because inflation erodes the value of cash savings if left idle.

The author uses a simple example: an investor who starts with a ₹10,000 monthly SIP and hikes it by 5 % every five years will have invested approximately ₹2.4 lakhs over 20 years (including increments). At an average annual return of 12 %, this could grow to roughly ₹12–15 lakhs. In contrast, a static ₹10,000 SIP over the same period would result in a corpus of about ₹7–8 lakhs. The difference—a surplus of ₹4–6 lakhs—is striking and showcases how disciplined increments pay off.

3. Behavioral Insights: The Discipline of Incremental Growth

The article also taps into behavioral finance to explain why many investors shy away from adjusting their SIPs. People are wired to resist change, especially when the change involves financial commitments. The author suggests a few psychological nudges:

• Automate the Increment – Setting up an automatic increase on a mutual‑fund platform every five years eliminates the cognitive load and the temptation to skip it.
• Tie Increments to Milestones – Linking SIP hikes to life events (e.g., a child’s graduation, a home renovation, a new job) creates a tangible anchor for the increase.
• Reinforce the “Future‑You” Benefit – Visualizing the end‑of‑term corpus helps investors see the payoff and stay committed.

By framing the SIP increment as a small “investment in the investment,” the article demonstrates how behavioral nudges can help investors overcome inertia and consistently grow their portfolios.

4. Practical Steps for Implementing a 5‑Yearly Increment

The article offers a clear, step‑by‑step guide for readers who want to apply this strategy:

1. Calculate the Increment Target – Decide on a 5 % raise. For a ₹10,000 SIP, this means increasing to ₹10,500 after five years.
2. Set Calendar Reminders – Mark the date on your calendar to review your SIP in five years.
3. Use a Mutual‑Fund Platform that Supports Incremental SIPs – Many platforms let you auto‑increase the monthly amount by a set percentage or a fixed amount at predetermined intervals.
4. Re‑evaluate Fund Choice – Over time, consider shifting to a fund that aligns with your updated risk tolerance or investment horizon. The article references a linked guide on “How to Choose Mutual Funds,” which can aid in this decision.
5. Track Performance – Regularly review your portfolio’s performance to stay motivated. The linked “Performance Tracker for Mutual Funds” feature can be useful here.

These actionable steps transform an abstract concept into a concrete routine, making the incremental SIP approach accessible even to novices.

5. Complementary Resources and Further Reading

The Business Today article is part of a broader ecosystem of content that supports investors:

• Why Mutual Funds are Better Than Fixed Deposits – A linked article that explains the higher returns, diversification, and liquidity that equity mutual funds provide compared to traditional fixed deposits.
• Choosing the Right Mutual Fund – Another resource that walks readers through fundamental criteria such as expense ratio, past performance, fund manager tenure, and asset allocation.
• Tax Implications of Mutual Fund SIPs – A guide that clarifies how long‑term capital gains (LTCG) are taxed for equity funds, how the 10 % tax on gains above ₹1 lac applies, and the benefits of investing in tax‑efficient units like Equity‑Linked Savings Schemes (ELSS).

These linked pieces round out the narrative, offering readers a deeper understanding of how SIPs fit into a comprehensive investment strategy.

6. Bottom Line: Incremental Discipline Drives Long‑Term Wealth

The crux of the article is that wealth accumulation is as much about how much you invest as it is about how often you increase your investment. A 5 % raise every five years may seem trivial in the short term, but compounded over two decades, it can transform modest SIP contributions into a sizeable nest egg that outpaces inflation and offers financial security.

By anchoring this increment strategy to salary hikes, significant life events, and automated tools, investors can sidestep the common pitfalls of “setting it and forgetting it.” The article also reassures readers that the strategy works across a range of market conditions—be it a bullish run, a bear market, or a period of high volatility—thanks to the smoothing effect of rupee‑cost averaging and compounding.

In essence, the Business Today piece invites readers to adopt a simple habit: every five years, look at your SIP, add a modest 5 % (or any predetermined increment), and let the market do its magic. Over time, this disciplined, incremental growth can turn everyday savings into a substantial, inflation‑protected wealth reservoir.