How to use this calculator?
Let’s say you start a SIP with ₹5,000 per month, and you plan to increase this amount by ₹1,000 every year. You intend to invest for 20 years and expect a return of 12% annually. Simply enter the following values:
- Initial Monthly SIP: ₹5,000
- Annual Increase (Step-Up): ₹1,000
- Investment Period: 20 years
- Expected Annual Return: 12%
After entering these details, the calculator will show your total investment, the wealth gained through returns, and the final maturity amount.
This is especially useful if your income grows over time and you want your investments to grow alongside your salary.
Step-Up SIP calculator
The Step-Up SIP calculator estimates the future value of your investments when you increase your monthly contribution at regular intervals — typically every year. It gives a clearer picture of how a gradually rising SIP can significantly boost your wealth over the long term.
Formula used in this Calculator? With explanation
This calculator uses a modified version of the SIP future value formula that accounts for an annual increase in SIP amount. The exact formula is more complex and is computed programmatically, but it’s based on the principle of compound interest with stepped contributions.
FV = FV₁ + FV₂ + FV₃ + … + FVₙ
- Each year’s SIP is treated as a separate SIP series, with its own contribution amount and time left to compound.
- The calculator adds up the future values of all yearly SIP levels to arrive at the total.
This step-up strategy ensures your increasing income is matched with increasing investments, leading to exponential growth in the long run.
Understanding the benefits:
A Step-Up SIP is ideal for investors whose income grows over time. By gradually increasing your SIP contributions, you not only maintain your saving discipline but also accelerate wealth creation. You start small, and as your capacity improves, so does your investment potential.
This method helps you fight inflation more effectively and shortens the time needed to achieve financial goals like retirement, home buying, or children’s education. It also builds a healthy financial habit of increasing savings alongside salary hikes, bonuses, or promotions.
However, ensure your step-up amounts are realistic and fit comfortably within your budget. For personalized advice and portfolio planning, it’s recommended to consult a financial advisor.
Disclaimer:
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