Question 1

What is a step-up SIP?

Accepted Answer

A step-up SIP (Systematic Investment Plan) is a strategy where you increase your monthly SIP amount by a fixed percentage every year. For example, if you start with Rs 10,000/month and set a 10% annual step-up, your SIP becomes Rs 11,000/month in year 2, Rs 12,100/month in year 3, and so on. This helps your investments keep pace with salary increments.

Question 2

How much difference does a step-up SIP make?

Accepted Answer

A 10% annual step-up on a Rs 10,000/month SIP at 12% returns over 20 years can grow your corpus from Rs 1 crore (flat SIP) to over Rs 2.5 crore. The step-up benefit increases exponentially with longer time horizons, making it one of the most effective wealth-building strategies.

Question 3

What is the ideal step-up percentage for SIP?

Accepted Answer

Financial advisors typically recommend a step-up of 10-15% per year, which roughly matches average salary increments in India. A step-up higher than your income growth may strain your budget, while too low a step-up misses the compounding benefit.

Financial Calculators