Step Up SIP Calculator
A Step Up SIP (or Top-up SIP) allows you to automatically increase your monthly SIP amount by a fixed percentage or fixed amount every year. As your salary and income increase annually, increasing your SIP amount helps you reach your financial goals significantly faster.
Why should you Step Up your SIP?
Inflation decreases the purchasing power of money over time. If you invest the same flat amount for 20 years, its actual value diminishes. By stepping up your SIP, you combat inflation and compound a much larger corpus.
How does the calculation work?
The calculator breaks down your investment into yearly tranches. Each year, the monthly investment amount increases by the step-up percentage.
Year 1 SIP = Base Amount
Year 2 SIP = Base Amount + (Base Amount × Step-Up %)
Each tranche is then compounded using the standard SIP formula.
Example:
If you start a SIP of ₹10,000 with an annual step-up of 10% and an expected return of 12% for 10 years:
Year 1 SIP: ₹10,000/month
Year 2 SIP: ₹11,000/month
Total Invested over 10 years: ₹19,12,491
Total Value (Corpus): ₹33,14,220
Without the step-up, your corpus would only be ₹23,23,391. The 10% step-up created an extra ₹10 Lakhs!
Advantages of a Step Up SIP
- Aligns with Income Growth: Increases naturally as you get annual appraisals or increments.
- Achieve Goals Faster: A small 5-10% annual increase drastically reduces the time needed to reach a target corpus.
- Convenience: You don't have to start a new SIP every time your salary increases; the step-up is automated.