This Step up SIP Calculator helps you to know how much profits you can make in future based on your step up amount or percent and expected rate of return.
A good expected rate of return can be between 10% to 12% in good mutual fund over long term of at least 5 years. Step up option will help you to achieve your goals before time!
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ALSO READ: Types of Mutual Funds in India
- Download Step up SIP EXCEL Calculator from here
- Download our Android App FinCalC to see Slab-wise details of your Income Tax Calculation
- What is Step up SIP?
- Why Step up SIP is important and how it is useful to you?
- How will step up sip help you?
- How is step up SIP calculated?
- Difference between SIP and Step up SIP?
- How Step up SIP Calculator will help you?
- What is annual Step Up in SIP?
- Benefits of Step up SIP
- Frequency of step up SIP
- Can we do step up SIP on existing SIP?
What is Step up SIP?
Step up SIP is a way to invest your hard earned money regularly in mutual funds, similar to SIP (Systematic Investment Plan) but with an increase in SIP amount every year or quarter. Usually the frequency of step up in SIP is every year and you get the chance to automate the process of increasing your SIP amounts every year with the help of automation provided by many mutual funds.
Why Step up SIP is important and how it is useful to you?
Step up SIP helps you to increase your SIP investment amount automatically when you get yearly salary increments or promotions or bonuses. It is a good way to invest in mutual funds when you know your income is going to increase every month. With the increase in income, your expenses also tend to increase with lifestyle change, and step up SIP is a way to keep up with your investments as well, when there is an increase in income.
It is important to note that you can easily set the percentage of step up (the amount by which you want to increase SIP amount) and accordingly you’ll get the benefits of step up SIP. For example, if your salary increases by 10% in a year due to yearly increment in salary, it is good option to increase your SIP amount of Rs. 5,000 by 10% and set it as Rs. 5,500 as the new SIP amount. This will help you to keep your SIP active and also to get more benefits in terms of mutual fund returns by increasing the SIP amount every year.
How will step up sip help you?
As mentioned above, SIP is beneficial due to it’s benefit of Rupee cost averaging, where you buy less units when market goes down and more units when market goes up. And by doing step up SIP, you keep aside additional amount as investment when you get yearly salary increments or promotions compared to your increase in expenses after lifestyle change due to such events.
This keeping aside of additional amount as investment in step up SIP will help you achieve your goals faster with less stress since the additional amount you added in SIP is affordable and is a percentage from your income increase amount.
How is step up SIP calculated?
Step up SIP calculation is similar to SIP calculation, but with the only factor of increasing the SIP amount every year. Below are the steps to calculate step up SIP amount:
- Let’s say you want to start with SIP = Rs. 5000 for first 1 year
- And after a year you want to increase sip amount by 10% every year for next 5 years
- So, in 2nd year, your 10% increase will be done on existing SIP of Rs. 5000, and SIP amount in second year will be Rs. 5,500
- In third year, 10% increase will be done of SIP of Rs. 5,500 and SIP amount will be Rs. 6050 and so on.
Below is the table showing Step up SIP amounts for first 5 years starting with SIP = Rs. 5000:
| Years | SIP Amount | Step up % | Increase in SIP |
|---|---|---|---|
| Year 1 | Rs. 5,000 | 10% | Rs. 500 |
| Year 2 | Rs. 5,500 | 10% | Rs. 550 |
| Year 3 | Rs. 6,050 | 10% | Rs. 605 |
| Year 4 | Rs. 6,655 | 10% | Rs. 665.5 |
| Year 5 | Rs. 7,321 | 10% | Rs. 732 |
| Year 6 | Rs. 8,053 |
As seen above, Rs. 8,053 will be your SIP amount in 6th year after you increase SIP amount every year by 10% starting with Rs. 5,000 per month in first year. This gradual increase in SIP amount will help you buy more mutual fund units and get more returns via SIP.
Compared to conventional SIP, you must be still investing Rs. 5,000 per month even after 5 years by not thinking about step up SIP, and all your income increments every year must have gone in your expenses, if not in other investment options.
Difference between SIP and Step up SIP?
As seen in above example, the only example is increase in SIP amount every year in step up SIP option. Other difference is the increase in profits that you make in step up SIP which is a by product of increase in Step up SIP amounts.
Below is the video showing you the SIP vs top up SIP with some numbers in excel:
How Step up SIP Calculator will help you?
Above step up SIP calculator helps you in knowing the approximate maturity amount you may get for your investments. Below are the steps on how to use step up sip calculator:
- Enter the initial monthly investment amount
- Select the option between percent or amount step up you want to do in SIP
- Provide the step up percentage or step up amount on yearly basis
- Enter the expected returns in percentage on yearly basis
- Enter the time period in terms of years for which you will continue your SIP
- By entering above details, you’ll see the total deposits, total profits and the maturity amount after time period entered based on the expected returns provided.
Below is how Step up SIP calculator works:
What is annual Step Up in SIP?
Annual step up in SIP is the amount of increase you wish to do in SIP. In above example we saw 10% increase in SIP amount is what we which to do every year after salary increments or promotions. So for Rs. 5000 SIP, 10% annual step up will by additional Rs. 500, which make your SIP amount as Rs. 5500 in next year.
Most of the mutual fund companies and third party apps provide you with the option of step up SIP in order to help you achieve your goals faster and to be consistent in your investments.
Benefits of Step up SIP
There are many benefits of Step up SIP:
- You are disciplined towards your goals by investing via SIP every month
- Step up SIP helps you achieving your goals faster
- You don’t have to stress much since you are not doing lump sum investing, where a large chunk of money goes in investment and is highly risky, but is highly profitable as well
- Also, you get the benefit of Rupee cost Averaging in SIP
- You can also become a crorepati by doing step up SIP
Frequency of step up SIP
Usually the frequency of step up in SIP is annually, since the increments, bonuses or promotion expected are on yearly basis. But you can also opt for quarterly or half yearly frequency of step up.
It completely depends on you which option you want to select, but yearly step up frequency is common in most cases since majority of the people investing via SIP are salaried employees.
Can we do step up SIP on existing SIP?
Yes, you can opt to increase your SIP on existing SIP as well. As mentioned, Step sup SIP is nothing but a practice of increasing your SIP amount every year, when events such as income increase or promotions takes place.
Many mutual fund companies allows you to do step up SIP on your existing SIP to help you achieve your goals faster and more smoothly, with less risk compared to lump sum investing or stocks investing.
Also, you can Download Free Android App “FinCalC” to calculate SIP returns and income tax as well. I have developed this mobile app calculator for you and with your valuable feedbacks, we have improved this mobile app calculator with time. Download and check out it’s features:
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Found this Helpful? DONATE any amount to see more useful Content. Scan below QR code using any UPI App!
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Income Tax Calculator App – FinCalC
For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.
What you can do with this mobile App?
- Calculate Income Tax for new FY 2023-24 and previous FY 2022-23
- Enter estimated Investments to check income tax with Old and New Tax Regime
- Save income tax details and track regularly
- Know how much to invest more to save income tax
- More calculators including PPF, SIP returns, Savings account interest and lot more
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