Tool
Step-up SIP Calculator
What a SIP grows to when you raise the instalment every year, with the amount you contributed shown against the amount compounding added.
How much you raise the instalment each year — set it to 0 for a flat SIP
- Invested amount
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- Est. returns
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- Final year's instalment
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- Total value
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How the number is worked out#
A step-up SIP — sometimes called a top-up SIP — raises the monthly instalment by a fixed percentage every twelve months. Because the instalment changes, there is no single clean formula. Each year is its own annuity, valued at that year's end and then compounded for the years remaining:
M = Σ P × (1 + g)^k × [((1 + i)^12 − 1) ÷ i] × (1 + i) × (1 + i)^(12 × (T − 1 − k))
Where P is the starting instalment, g the annual step-up, i the monthly rate (annual rate ÷ 12 ÷ 100), T the tenure in years, and k each year from 0 to T−1. Set the step-up to 0 and this collapses to exactly the plain SIP formula.
A worked example#
₹5,000 a month, raised 10% each year, at an assumed 12% return over ten years:
| Flat SIP | 10% step-up | |
|---|---|---|
| First year's instalment | ₹5,000 | ₹5,000 |
| Final year's instalment | ₹5,000 | ₹11,790 |
| Total invested | ₹6,00,000 | ₹9,56,245 |
| Estimated value | ₹11,61,695 | ₹16,87,163 |
The step-up version ends up 45% larger. Note where that comes from: you contributed ₹3,56,245 more, and compounding turned it into ₹5,25,468 more. The step-up is not a cleverer investment — it is a larger one, arranged so the increases land as your income rises rather than all at once.
Why this usually beats deciding to invest more later#
A step-up mandate is a decision made once. Raising a flat SIP by hand requires deciding again every year, in a month when the money has somewhere else to go. The arithmetic above is available to anyone running a flat SIP who raises it 10% annually; in practice most do not, because nothing prompts them.
A 10% annual step-up is roughly what a normal salary increment absorbs, which is the point: the instalment grows out of the raise instead of out of existing spending.
What this does not include#
Inflation. ₹11,790 in year ten is not ₹11,790 of today's money, and the ₹16.87 lakh is a nominal figure. At 5% inflation it buys what about ₹10.35 lakh buys now.
Your ceiling. The calculator will happily compound a step-up past what any salary could fund. A 25% step-up over twenty years ends at 86 times the opening instalment. Check the final year's instalment against a plausible future income before planning around the total.
Expense ratio and tax. Fund returns are quoted after the expense ratio, so if your assumption came from an index rather than a fund, subtract roughly 0.2% for an index fund or 1% to 1.8% for an active one. Gains above the annual exemption are taxed on redemption, and each instalment has its own holding period.
Questions#
Do fund houses actually support this?#
Most AMCs and brokers offer a step-up or top-up option on the SIP mandate, usually as a fixed percentage or a fixed rupee amount annually. Where it is not offered, the alternative is a fresh SIP each year alongside the existing one, which achieves the same thing with more mandates to track.
Percentage step-up or fixed rupee step-up?#
This calculator models a percentage, which compounds — the increments themselves grow. A fixed ₹1,000-a-year step-up rises in a straight line and is easier to plan against a known salary band. Over long tenures the percentage version pulls well ahead.
Should I step up or extend the tenure?#
Extending wins on the same contributions, because the money spends longer compounding. Stepping up wins when you have more to contribute and a fixed horizon — a retirement date does not move because you got a raise. Most people should do both, and the honest comparison is to run this against the SIP calculator with a longer tenure.