Step-Up SIP Calculator

Most people can invest more as their careers progress, yet many set a SIP once and never touch it. A step-up SIP builds the increase in from the start: the instalment rises every year, so the amount you invest keeps pace with your income. Because the larger instalments come later and have less time to grow, the effect is smaller than it looks at first, but the extra money put in is still a large part of the final corpus.

Two ways to step up

A percentage step-up multiplies the monthly amount each year, so 10,000 becomes 11,000, then 12,100, then 13,310. A fixed step-up adds the same amount, for example 1,000, so 8,000 becomes 9,000, then 10,000. Percentages grow faster in the later years and suit people whose pay is expected to grow in proportion. Fixed amounts are simpler and more predictable, and suit smaller raises. The Raise menu and the Step-up field choose between them.

A worked example

The default is a 10,000 SIP for 15 years at 12%, increased by 10% a year. The value at the end is 86,83,849, from 38,12,698 invested, a gain of 48,71,152. In year 15 the monthly instalment is 37,975. A flat SIP of 10,000 for the same 15 years grows to 50,45,760, so stepping up adds 36,38,089 to the corpus while requiring 20,12,698 more of your own money. The table shows year two as an instalment of 11,000, 2,52,000 invested so far and a value of 2,85,241. With a fixed step of 1,000 from 8,000 over 20 years at 11%, the value is 1,23,35,866 from 42,00,000 invested, with the instalment reaching 27,000.

What the comparison shows

The two extra lines answer the question people actually ask: is it worth it? The extra corpus divided by the extra money gives a rough idea of the return on the increases. In the default example, 20 lakh of additional contributions produces 36 lakh of additional corpus. That ratio is lower than for the first instalments, because the later money has less time to grow, but it is still positive, and it grows with the period and the return.

Choosing the numbers

Use a return you would be comfortable with even if markets disappoint, such as the lower end of what your funds have delivered over long periods. Decide the step-up from your real income growth, not hope: if the instalment starts to hurt when your pay does not rise, the plan will not last. The page lets you try different values quickly, so test a low, a medium and a high step-up.

Edge cases

The first twelve instalments are all the same; the increase starts in month thirteen. A step-up of zero reproduces a flat SIP, and the extra lines show zero. Years must be a whole number up to 60, and very long periods give very large numbers that are right in arithmetic but unlikely in life. Returns between −50 and 100 percent are accepted for experiments.

Limits

The return is constant, which real markets are not. Tax, exit loads and fund expenses are not deducted. The page does not consider job changes or breaks in contributions, and each instalment is assumed to be invested on the first day of its month.

Related tools

• SIP Calculator gives the flat projection with an optional increase and a one-time starting amount.
• Lump Sum vs SIP Calculator compares spreading money out with investing it at once.
• SWP Calculator shows the income the finished corpus could pay.
• Retirement and FIRE Calculator applies a rising saving to a retirement target.