Why Should an Investor Aim to Increase Their SIP By 15% Every Year?

Most investors see saving as a burden. When some investor is told to save more, they tend to groan inwardly and are annoyed by the whole idea of saving more, despite making the best efforts towards the same! This article will unearth reasons why exactly saving more every month towards a SIP is not just a fantastic thing but a necessity as well. 

Saving is undoubtedly very hard

A person's salary generally grows by a specific percentage above the inflation rate and it depends on the economy a lot. It also depends on a couple of other factors like years of experience, the industry one belongs to, etc. In the last few years, salary growth has been within the range of 8 – 10% for the majority of private-sector employees. 

The salary growth of 10% for someone who makes 5 lakhs a year might not be that big an amount for someone who earns 12 lakhs. Taxes impact salary growth too. Inflation is presently trending at 5-6% p.a. In the case of services as well as entertainment, inflation is on the higher side as well. So, saving can be a tough thing today.  

For the best saving advice, one can get in touch with Wealthclock Advisors. They are prominent financial advisors who operate in different cities and offer excellent ways to invest in mutual funds online. 

Beating inflation requires higher saving 

For most people, their income would have grown along with their expenses. But did their savings grow in line? Inflation might be lower in the last few years but it will surely strike in the future big time! An investor's monthly saving of Rs 5000 six years back is not the same as saving Rs 5000 at present. 

So basically, an investor's present savings are more valuable than their futuristic savings. This simple fact escapes most who think it is best to save only when they have enough. Those who began saving, say for example Rs 500 in 2007, is worth double at present. Considering money is devalued every year, financial independence needs active steps to steer ahead.

The magic of a 15% increase

Saving more and investing it would make a huge difference in the lives of the investors. The best advisors always recommend investing in equity mutual funds for this purpose as it can give a return of nearly 12% annually. Increasing the SIP amount every year by a whopping 15% can dramatically affect an investor's final goal amount. 

When the increase is 15% the result is a corpus that's near to three times bigger! Yes, considering inflation, the buying power of such amounts will be lower than the numbers showcase. But upon a good understanding of one's financial goals, an investor can plan for them and invest adequately.  

Even starting small will not act as a barrier to the investor's financial security! 

In the case of investing, something is a lot better than nothing as such!