Most investors start a SIP with a fixed amount—₹10,000 a month and never change it. While incomes rise over time, investments often don’t. The result? Expenses inflate, but wealth creation lags. A Step-up (Top-up) SIP fixes this by increasing your SIP every year, aligning investments with income growth.
A Step-up SIP simply means raising your SIP by a fixed percentage or amount annually—say 5% or 10%. What looks like a small adjustment can dramatically change long-term outcomes.
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Consider this illustration of Simple Flat SIP, Step up with 5% and 10% increaseover 10 & 20 Years
| SIMPLE SIP | ||||
| Monthly SIP Amount | Tenor (Yrs) | Investment Amount with Simple SIP | Future Value if it generates 12 % returns | Future Value if it generates 14 % returns |
| 10,000.00 | 10 | 12,00,000.00 | 22,40,000.00 | 24,93,000.00 |
| 10,000.00 | 20 | 24,00,000.00 | 92,00,000.00 | 1,17,35,000.00 |
| SIP STEP UP OF 5% | ||||
| Monthly SIP Amount | Tenor (Yrs) | Investment Amount with Step up of 5% SIP | Future Value if generates 12 % returns | Future Value if generates 14 % returns |
| 10,000.00 | 10 | 15,00,000.00 | 26,94,000.00 | 29,77,000.00 |
| 10,000.00 | 20 | 39,68,000.00 | 1,27,53,000.00 | 1,58,85,000.00 |
| SIP STEP UP OF 10% | ||||
| Monthly SIP Amount | Tenor (Yrs) | Investment Amount with a step-up of 10% SIP | Future Value if it generates 12 % returns | Future Value if it generates 14 % returns |
| 10,000.00 | 10 | 19,00,000.00 | 32,69,000.00 | 35,88,000.00 |
| 10,000.00 | 20 | 68,73,000.00 | 2,26,00,000.00 | 2,48,00,000.00 |
The magic lies in compounding on a rising base. You don’t just invest more—you invest more earlier, giving each additional rupee more time to grow. And because increases are gradual, they’re psychologically easier than large one-time jumps.
Also read: SIFs Bring Hedge-Fund Firepower to India’s Affluent Investors – OrangeNews9
Step-up SIPs also remove market timing anxiety. You invest more as your earning power grows, regardless of market cycles, and automatically convert salary hikes into long-term wealth instead of lifestyle inflation.
For younger investors, step-up SIPs act like rocket fuel for compounding. Even those starting in their 40s can meaningfully bridge retirement gaps by steadily increasing their savings rate.
