What is a Step-Up SIP?
A Step-Up SIP (also called a Top-Up SIP) increases your monthly SIP amount by a fixed percentage every year. Most people set the step-up to 10% so it roughly tracks salary hikes. Over a long horizon the difference vs a flat SIP is dramatic, because the bigger monthly contributions in later years still get years of compounding.
Step-Up SIP Formula
Year y monthly SIP = P × (1 + s)^(y − 1)
Corpus = compound each year's monthly stream until the end of the tenure
Corpus = compound each year's monthly stream until the end of the tenure
where P is the starting monthly SIP, s is the annual step-up rate. The calculator above runs this iteratively so the math matches what a fund house statement shows.
Step-Up vs Flat SIP — Worked Example
₹10,000/month for 20 years at 12% gives roughly ₹99 lakh. The same starting SIP with a 10% annual step-up over 20 years grows to about ₹1.93 crore — almost double, for an investor who simply matched their SIP to salary increments.
When to Use Step-Up SIP
- You expect annual salary hikes of 8–12% and want investments to grow with income
- You are young, with a long time horizon — step-up compounds harder over 20+ years
- You are saving for a specific goal like a home down payment or retirement and want to hit it faster
- You are following the 50–30–20 rule and want investments to scale with income, not stay flat