About Step-up SIP Calculator

As your earnings grow, shouldn’t your investments also grow? Many individuals start out investing a little money every month with a Systematic Investment Plan (SIP). SIPs are outstanding investment instruments that help in wealth creation. However, a Step-up SIP refers to a SIP whereby instead of just a fixed amount every month, the SIP is structured to increase periodically, so that your investments increase as your income increases, and consequently helps you get to your financial freedom a lot quicker.

A Step-up SIP (also known as a Top-up SIP, Increasing SIP) is an investment facility offered by many mutual funds that enables you to pre-set an automatic increase to your SIP amount by a fixed amount or by a fixed percentage after a specified period (e.g. annually), and you just have to forget about it. This change can have a powerful impact in developing a reasonable size corpus over the long term due to the nature of compounding a progressively larger principal.

For example, you could start out with little and then increase your SIP every year (say, at 10 percent a year) but considerably ahead of a SIP with no increase over the same 15-20 year timeframe. The sum of the corpus as of the end of the period of the two SIPS, one being a static amount and the other increasing, is going to be quite an incredible realization! That is simply because not only are you investing more, but that investment begins to compound in value even earlier.

We, at PaisaForever have developed a Step-up SIP Calculator to make the visualization of this powerful growth easier for you. Enter your starting SIP amount, the stepping-up percentage expected each year, your expected rate of return annually, along with your investment duration. The calculator will return an estimated value of how much your investment will be worth in the future to help you appreciate the incredible value of increasing your monthly SIP on a regular basis. The Step-up SIP calculator is useful for long-term financial planning for important goals like retirement; a child’s higher education; or purchasing your dream home to help you realize how your systematic investment plan’s increasing discipline will improve your chances of achieving your goals.

Frequently Asked Questions (FAQs) about Step-up SIPs

1) What is a Step-up SIP? 

A Step-up SIP (Top up SIP or Increasing SIP) is a facility, which allows you to periodically increase your SIP amount by fixed amount or fixed percentage. The increase usually occurs at a regular frequency like year on year after a specific fixed income amount.

2) How does a Step-up SIP work? 

You decide your SIP amount, then your step-up amount (₹500 rupees) or step-up percentage (10%), frequency (annually), and the mutual fund deducts that from your bank account at the specified frequency.

3) What are the advantages of a Step-up SIP? 

The primary benefit is wealth creation at an accelerated pace. As your income increases, a Step-up SIP accommodates for that extra investment amount leading to a much greater corpus in time, due to the power of compounding over higher amounts. It also helps combat inflation by increasing your investment value.

4. When should I use a Step-up SIP? 

You should use a Step-up SIP when you expect your income to increase – this could be an annual increment or a job affirmation increase. A Step-up SIP takes the pressure off you to set up new SIPs constantly and allows you to raise your investments automatically whenever you are able, based upon your rising earnings. 

5. How is a Step-up SIP different from a regular SIP? 

A regular SIP has you investing a specified amount each month for the entire investment period. In a Step-up SIP, your monthly investment amount periodically (e.g. yearly) increases by a certain amount or percentage.

6. Is a Step-up SIP suitable for everyone? 

A Step-up SIP is suitable for someone who expects to see a steady increase in their income over time. If you have unpredictable or volatile income, a regular SIP may be a better fit for you.

7. Can I later change the step-up amount or percentage? 

Yes, in most cases with mutual fund houses, you have the option of changing the step-up amount or percentage later (or just cancelling the step-up facility). Generally, you would need to put a request to the AMC or by the investment platform you initially used.

8. What may happen if I missed a Step-up SIP Payment? 

Pretty much the same as a regular SIP payment – if you don’t have enough money in bank account for a Step-up SIP payment, then SIP may fail. If these payments keep failing, SIP could stop altogether, which would also stop the step-up facility.

9. How is the Step-up SIP calculator useful? 

Our calculator can show you the future value of your investments based on your current SIP amount, step-up, expected returns and length of investment. This way you can plan around your financial goals.

10. Will I incur any charges by using the Step-up SIP? 

No, mutual fund houses typically don’t charge any extra fee for choosing or applying the step-up SIP facility. It is just an option, equal to investing with a SIP.

11. What if I cannot meet the step-up SIP payment, because of an increase in SIP amount? 

You can always simply stop the step-up facility or reduce your SIP amount, just by advising your mutual fund house.  Flexibility is key in financial planning.

12. Can I utilize a Step-up SIP for multiple financial objectives? 

Yes! A Step-up SIP is a multi-purpose investment vehicle for different long-term financial objectives like retirement planning, funding your child’s education or marriage, or amassing a down payment on a new home, etc.

Disclaimer: This calculator is for informational purposes only. Actual returns may vary. Always consult a financial advisor before investing.