Top-Up Your SIP To Beat Inflation, Says SBI Mutual Fund’s Kunaal Khanna

Systematic Investment Plans (SIPs) are widely regarded as one of the powerful tools to build wealth over time. They offer a simple, disciplined, and effective way to invest in mutual funds regularly. However, as Kunaal Khanna, SVP and Head – Affluent Clients and PMS at SBI Mutual Fund, said, starting a SIP is only half the work.

Speaking at the 40after40 event organised by Outlook Money on February 20 and 21, Khanna asked the audience a simple question: “Is your SIP alive?” That was also the theme of his workshop. He said that while many investors begin their SIPs with enthusiasm, they often fail to review or increase them over time. Contributions remain the same for years, even as incomes rise and goals change.

Khanna emphasised that a SIP should not be left on autopilot for years. It needs to grow along with income, financial goals and rising expenses. Otherwise, investors may realise much later that although they invested regularly, their corpus has not kept pace with their needs.

What Makes SIPs Popular

SIPs, Khanna said, were created to make investing simple for ordinary investors. You don’t need to time the market. You don’t need large sums of money. You just need consistency.

• He highlighted what makes SIPs so popular:

• They are easy to start and manage.

• They bring financial discipline by encouraging regular investing.

• They work across market cycles, an all-weather solution.

• And most importantly, they harness the power of compounding over the long term.

From Gullak to Goal-Based Investing

Khanna referred to the simple concept of a gullak, or piggy bank, to make his point. He said Indians have always saved with a purpose in mind,  whether it was for education, marriage, buying a house or handling emergencies. The idea of goal-based saving is not new.

What is different today, he explained, is the need for planning and structure. Instead of saving casually, investors should clearly define their goals, assign timelines and invest accordingly.

He then shared a four-level goal priority framework to help investors organise their financial plans.

Level 1 – Must Have
Emergency fund, life insurance

Level 2 – Should Have
Health insurance, child’s education, retirement planning

Level 3 – Good to Have
Home purchase, car upgrade

Level 4 – Can Have
Vacations, luxury purchases, hobby investments

“Creating SMART goals transforms vague wishes into actionable financial plans, dramatically increasing your chances of success,” he said.

SIP: Still Alive or Just Living on Past Glory

Khanna said many investors feel confident because their SIP has been running for years. But just because it is active does not mean it is effective.

A SIP can slowly lose relevance if the amount has not been increased for a long time, the portfolio is not reviewed, and the returns are barely better than fixed deposits. In such cases, the SIP continues to run, but it may not be enough to meet future financial goals.

“That’s slow destruction,” he said, adding that emotional detachment from investments is dangerous. A SIP needs monitoring, periodic increases and alignment with changing life circumstances.

Inflation: The Real Villain

In his workshop, Khanna also emphasised how inflation silently destroys your wealth over time.

He explained, saying how everyday expenses, be it education fees, house rent and even grocery bills, have steadily increased over the years. Even a 6 per cent annual inflation rate can double monthly expenses in about 12 years. That means the money that seems sufficient today may fall short much sooner than expected.

Inflation, he said, quietly reduces purchasing power year after year. Many people underestimate its impact until it is too late. “Income may stop after retirement. Expenses don’t. Inflation certainly doesn’t,” Khanna cautioned.

Retirement: Planning Makes the Difference

Contrasting two retirement scenarios, Khanna painted a vivid picture.

Without planning:

• Income stops, expenses don’t

• Inflation eats away savings

• Independence turns into dependence

• Dreams shrink to “Ab is age mein…”

With disciplined SIP investing:

• A pension-like cash flow can be created

• Inflation can be quietly countered

• Financial dignity and freedom remain intact

• Choices to live well: travel, health, hobbies

Your Income Is Growing. Is Your SIP

Most professionals see annual salary growth of 8–15 per cent through increments and promotions. Yet, their SIPs often remain frozen at the amount decided years ago when their income was much lower.

Meanwhile, lifestyle inflation, like better homes, cars, and gadgets, keeps pace with earnings. Investments, however, lag behind.

The Power of Top-Up SIP

This is where the idea of a top-up, or step-up, SIP becomes important. It allows investors to increase their SIP amount automatically every year, usually in line with salary hikes.

Khanna explained that even a small annual top-up can make a big difference over time. To show this, he shared a simple 20-year comparison, assuming a 12 per cent annual return.

Standard SIP: Rs 20,000 per month, no annual increase
Final corpus: Rs 1.99 crore

Step-Up SIP: Rs 20,000 starting amount, 6 per cent annual increase
Final corpus: Rs 2.94 crore

That 6 per cent annual increase, broadly in line with minimal salary hikes, can potentially create nearly Rs 1 crore in additional wealth over two decades.

“Don’t let your investments stagnate while your income grows,” he urged.

Four Steps to Keep Your SIP Alive

Khanna concluded the session by laying out a simple action plan for investors:

1. Goal Setting
List all goals with timelines, prioritise needs vs wants, and calculate requirements

2. Portfolio Creation
Build an emergency fund first, create goal-specific investments, and diversify across assets

3. Increase Investments
Got a salary hike? Increase SIP by at least 10 per cent annually. Your future self will thank you immensely!

4. Stay Committed
The biggest return killer? Stopping SIPs during downturns. Market corrections are buying opportunities - embrace them!