This step up SIP calculator will help you know how much profit you can make in the future based on yoursIncrease amount or percentageand expected return.
A good expected return for good investment funds can be between 10% and 12% over a long term of at least 5 years. The step-up option will help you reach your goals ahead of time!
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Was ist Step-up-SIP?
Step up SIP is a way to invest your hard-earned money regularly, similar to SIP(Systematic investment plan)but with an increase in the amount of SIP every year or quarter. Normally, SIP increases every year, and you have the option to automate the process of increasing your SIP amounts annually using the automation provided by many mutual funds.
Why Step up SIP is important and how it can be useful for you
Step up SIP helps you automatically increase your SIP investment amount when you receive annual raises, promotions, or bonuses. It's a good way to start investing in mutual funds when you know your income will increase every month. As income increases, your expenses tend to increase with lifestyle changes, and Step Up SIP is a way to keep up with your investments as income increases.
It is important to note that you can easily set the percentage of increase (the amount by which you want to increase the SIP volume) and accordingly you benefit from the advantages of step up SIP. For example, if your salary increases by 10% in a year due to annual salary increase, increasing your SIP amount by Rs is a good option. 5,000 by 10% and set it as Rs. 5,500 as the new SIP amount. This will help you keep your SIP active and also get more benefits in terms of mutual fund returns by increasing the amount of SIP every year.
How will step up sip help you?
As mentioned above, SIP is beneficial because of its benefitsAverage rupee cost, where you buy fewer units when the market goes down and more units when the market goes up. And by doing step-up SIP, you keep an additional amount set aside as an investment when you receive annual raises or promotions compared to your spending increases after a lifestyle change due to such events.
This saving of additional amount as investment in step-up SIP will help youReach your goals faster and with less stresssince the additional amount you added in SIP is affordable and is a percentage of your income increase amount.
How is Step-up SIP calculated?
Step-up SIP calculation is similar toSIP calculation, but with the only factor of increasing the SIP amount every year. Below are the steps to calculate the step-up SIP amount:
- Suppose you want to start with SIP=Rs. 5000for the first 1 year
- And after a year, you want to increase your drinking by 10% every year for the next 5 years
- So,in the 2nd year, your 10% increase on existing SIP will be done from Rs. 5000 and SIP amount the second year will beRs. 5.500
- Inthird year, 10% increase is carried out by SIP from Rs. 5,500 and SIP amount will beRs. 6050etc.
Below is the table showing step-up SIP amounts for the first 5 years starting from SIP = Rs. 5000:
| Years | SIP amount | Increase % | 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 the 6th year after increasing the SIP amount by 10% every year starting from Rs. 5,000 per month in the first year. This incremental increase in SIP amount helps you buy more mutual fund shares and earn more returns through SIP.
Compared to traditional SIP, you still need to invest Rs. 5,000 a month even after 5 years of not thinking about increasing SIP and all your income increases each year must have gone into your expenses if not into other investment opportunities.
Difference between SIP and Step up SIP?
As seen in the example above, the only example is the annual increase in SIP amount in the step-up SIP option. Another difference is the profit increase you get with step-up SIP, which is a by-product of increasing step-up SIP amounts.
Below is the video showing you howSIP vs. SIP chargingwith some numbers in itsurpass:
Watch more Excel videos here
How will Step up SIP Calculator help you?
Overstep up SIP calculator will help you to work out the approximate maturity amount you can get for your investments. Below are the steps to use the step up SIP calculator:
- Enter the initial monthly investment amount
- Choose the option between percentage or amount you want to increase in SIP
- Enter the step-up percentage or step-up amount on an annual basis
- Enter the expected returns in percent on an annual basis
- Enter the period of time in years that you will continue your SIP
- If you enter the details above, you will see thetotal deposits,total profitand thedue amountafter the period entered based on the expected returns provided.
Below is how the step up SIP calculator works:
What is an Annual Step Up in SIP?
The annual increase in SIP is the amount of increase you wish to make in the SIP. In the example above, we saw a 10% increase in the SIP amount, which is what we need to do every year after a raise or promotion. So for Rs. 5000 SIP, 10% annual step up by additional Rs. 500 making your SIP amount as Rs. 5500 next year.
Most third-party mutual fund companies and apps give you the ability to boost SIP so you can reach your goals faster and stay consistent with your investments.
Benefits of step-up SIP
There are many benefits of Step up SIP:
- You are disciplined towards your goals by investing through SIP every month
- Step up SIP helps you to reach your goals faster
- You don't have to worry much as you are not making blanket investments where a large chunk of the money is invested and is very risky but also highly profitable
- You also benefit fromRupee cost averageim SIP
- You can alsoBecome a Crorepati by doing Step Up SIP
Frequency of increasing SIP
Usually the increase in SIP occurs annually, as the expected increases, bonuses or promotions are on an annual basis. However, you can also opt for a quarterly or semi-annual increase.
It's entirely up to you which option you want to choose, but in most cases an annual incremental frequency is common since the majority of people investing through SIP are employees.
Can we boost SIP on top of existing SIP?
Yes, you can also choose to increase your SIP on top of an existing SIP. As mentioned, Step sup SIP is nothing more than a practice of increasing your SIP amount every year when events like income increases or promotions happen.
Many mutual fund companies allow you to increase SIP on top of your existing SIP so you can reach your goals faster and more smoothly, with less risk compared to lump sum investments or stock investments.
You can alsoDownload the free Android app "FinCalC".TocalculationSIP returnsAndincome tax as well as. I developed this mobile app calculator for you and with your valuable feedback we have improved this mobile app calculator over time. Download it and check out its features:
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I found itHelpful?DONATE any amountto see more useful content.Scan the following QR codewith any UPI app!
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Income Tax Calculator App – FinCalC
For income tax calculation on your mobile device you canDownload my Android app "FinCalC".which I have developed for you to make your income tax calculation easier.
What can you do with this mobile app?
- Calculate income tax for new FY 2022-23 and previous FY 2021-22
- Enter estimated investments to check income tax with old and new tax system
- Store and regularly track income tax details
- Know how much more you need to invest to save on income tax
- More calculators including PPF, SIP yields, Savings Account Interest and much more
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