Top-Up plan: For the first time in India, systematic investment plan with a feature of a “Top-Up” in the mutual fund industry has been announced by ICICI Prudential Asset Management Company.
Basically, this plan or this feature has the so-called top up facility. This top up facility allows the investors to increase their periodic investment or systematic investments through an automated route in multiples of Rs 500, on a pre-determined and regular basis.
Say for example you decide to get into a mutual fund managed by ICICI Prudential through a monthly SIP or systematic investment plan. In this plan, you decide to contribute 5000 per month. Now you opt for the top up facility and decide to increase you SIP amount after every year by 500 Rs. Hence, till one year, each month you would pay 5000 for the SIP investment. After 1 year, your monthly SIP investment amount will increase to 5500. After 2 years, it will become 6000 per month and so on.
The key benefits of the scheme are that it offers the flexibility to top up investment at pre-determined intervals of six months or 12 months. Also, it is said that the automatic features like a direct bank debit, or payment through debit card or credit card will provide execution ease in the investment process and reduce the efforts required by investor.
However, one of the biggest problems with this setup is that you will have to declare the top up amount and frequency before the commencement of the scheme. Say if you are willing to invest for 20 long years, you will have to make a prediction about your income and then take up the top up plan. There is no information available whether you can stop or basically – top-down – your investments based upon your situation. No information is available about the charges that the ICICI fund management will take if one wishes to top down or stop payment.
Related: ICICI RICH ULIP NFO Review, ICICI Prudential Focused Equity Fund
Another problem is that this top up plan is available through direct fund clearing, so one has to ensure that the increased amount is available at the specified date. What if your salary doesn’t reach your bank account on time and is delayed by a day or two?
Then the biggest question is about the consistent flow of funds. What if you loose your job after some time and do not have the extra money to invest? Can you come out of this scheme? What are the penalty charges? No info is given about that. ICICI has a very bad reputation when it comes to imposing penalties.
| Investors are advised to be aware of these charges before making a long or short term commitment. If things go bad, the ICICI AMC will show no mercy on you while imposing charges and penalties. A good feature altogether, provided you are sure about what you want to achieve and whether you have consistent funds to honour your investment obligations or not. | Table of Contents |
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