A SIP that stays at the same amount every month gets smaller in real terms each year, because prices and, usually, your salary keep rising. A step-up SIP raises the amount once a year, often in line with a raise at work. Most fund houses let you set this up when you start the SIP.
Flat or stepped up
Take ₹10,000 a month for 15 years in an equity fund, at an illustrative 10% a year before tax, and sell it all at the end.
- Kept flat: you put in ₹18 lakh. The fund grows to ₹40.16 lakh, and after ₹2.72 lakh of capital-gains tax you keep ₹37.44 lakh.
- Raised 10% every year: the SIP climbs to ₹37,975 a month by year 15. You put in ₹38.13 lakh and, after ₹4.26 lakh of tax, keep ₹67.74 lakh.
- Same ₹10,000 every month₹37.44 lakh
₹18.00 lakh put in; after ₹2.72 lakh tax
- Raised 10% every year₹67.74 lakh
₹38.13 lakh put in; after ₹4.26 lakh tax
₹10,000 a month to start, an illustrative 10% a year before tax, all sold at the end. The lighter end of each bar is the tax. Fund returns are assumed, not promised. Markets can fall.
Where the extra comes from
The stepped-up SIP puts in ₹20.13 lakh more and ends ₹30.30 lakh ahead. So most of the difference is simply more money going in. The rest is growth on that money. Because the extra arrives in later years, it has less time to grow than your first instalments did.
- Raised 10% every year
- Same every month
- Put in, raised 10% a year
Years of investing
See the numbers
| Years of investing | Raised 10% every year | Same every month | Put in, raised 10% a year |
|---|---|---|---|
| Today | ₹0 | ₹0 | ₹0 |
| Year 1 | ₹1.26 lakh | ₹1.26 lakh | ₹1.20 lakh |
| Year 2 | ₹2.78 lakh | ₹2.65 lakh | ₹2.52 lakh |
| Year 3 | ₹4.59 lakh | ₹4.18 lakh | ₹3.97 lakh |
| Year 4 | ₹6.73 lakh | ₹5.87 lakh | ₹5.57 lakh |
| Year 5 | ₹9.25 lakh | ₹7.72 lakh | ₹7.33 lakh |
| Year 6 | ₹12.21 lakh | ₹9.75 lakh | ₹9.26 lakh |
| Year 7 | ₹15.68 lakh | ₹11.99 lakh | ₹11.38 lakh |
| Year 8 | ₹19.71 lakh | ₹14.46 lakh | ₹13.72 lakh |
| Year 9 | ₹24.39 lakh | ₹17.17 lakh | ₹16.30 lakh |
| Year 10 | ₹29.81 lakh | ₹20.15 lakh | ₹19.12 lakh |
| Year 11 | ₹36.06 lakh | ₹23.42 lakh | ₹22.24 lakh |
| Year 12 | ₹43.28 lakh | ₹27.03 lakh | ₹25.66 lakh |
| Year 13 | ₹51.57 lakh | ₹31.00 lakh | ₹29.43 lakh |
| Year 14 | ₹61.09 lakh | ₹35.36 lakh | ₹33.57 lakh |
| Year 15 | ₹72.00 lakh | ₹40.16 lakh | ₹38.13 lakh |
Values before tax. The dashed line is what the stepped-up SIP has put in so far.
How big a step-up?
| Yearly rise | Last year’s SIP | Put in | You keep after tax |
|---|---|---|---|
| None | ₹10,000 | ₹18.00 lakh | ₹37.44 lakh |
| 5% | ₹19,799 | ₹25.89 lakh | ₹49.67 lakh |
| 10% | ₹37,975 | ₹38.13 lakh | ₹67.74 lakh |
| 15% | ₹70,757 | ₹57.10 lakh | ₹94.64 lakh |
An illustrative 10% a year before tax, all sold at the end.
A 10% yearly rise is ambitious if your income grows more slowly. A rise you can keep up is worth more than a bigger one you stop after a few years. Some people step up by a fixed amount instead, such as ₹1,000 a year, which is gentler.
Try it
Your SIP, flat or stepped up
- Kept flat, after tax
- ₹37.44 lakh
- Stepped up, after tax
- ₹67.74 lakh
Stepping up puts in ₹20.13 lakh more and leaves you ₹30.30 lakh more.
Things to weigh
- Your income. Set the step-up to what your salary is likely to allow, and keep an emergency fund outside the SIP.
- Returns vary. The 10% here is an illustration. A fund can fall in value for years at a time, and the step-up keeps investing through those falls.
- Tax is due when you sell. Selling in parts across financial years uses the ₹1.25 lakh yearly exemption on long-term gains more than once.
Try your own amount, step-up and return in the SIP calculator.
For education only. Not investment, tax or insurance advice. Examples use the figures stated in the guide; check your own before you act.