Step-up SIP vs regular SIP: what a 10% yearly raise adds
₹10,000 a month for 20 years makes about ₹1 crore. Raise it 10% each appraisal and it makes about ₹2 crore. The maths, the catch and how to pick a rate.
6 min read
Every April, appraisal letters land and salaries go up. For most people the SIP amount stays exactly where it was the day they set it up.
That one habit roughly halves what a SIP can build. Here's the maths, using the same code as our SIP calculator.
What is a step-up SIP?
A step-up (or top-up) SIP raises your instalment by a fixed percentage once a year. Start at ₹10,000, and with a 10% step-up you pay ₹11,000 a month in year 2, ₹12,100 in year 3, and so on. Most fund houses let you set this up once, so it happens without you doing anything.
It fits how Indian salaries work: pay rises most years, so the SIP can rise with it without hurting your budget.
A flat SIP vs a 10% step-up, side by side
Figure 1 from the SIP calculator
₹10,000 a month for 20 years: raised 10% a year vs kept flat
How to read it
- 1In year 9 the instalment passes ₹20,000 a month. Until about here the two plans look close; the gap is mostly the extra you paid in.
- 2From then on the lines split fast. The step-up ends at ₹1.99 Cr against ₹99.91 L for the flat SIP (dashed line): about ₹98.97 L more.
The step-up plan does pay in more: ₹68.73 L against ₹24 L. But most of the extra corpus is growth, not your own money. The bigger instalments of the later years ride the same 12% as everything else.
How much each step-up rate adds
| Yearly step-up | Last year's SIP | Total paid in | Corpus |
|---|---|---|---|
| None (flat) | ₹10,000/mo | ₹24 L | ₹99.91 L |
| 5% | ₹25,270/mo | ₹39.68 L | ₹1.37 Cr |
| 10% | ₹61,159/mo | ₹68.73 L | ₹1.99 Cr |
| 15% | ₹1,42,318/mo | ₹1.23 Cr | ₹3.03 Cr |
Look at the "last year's SIP" column before picking a rate. A 10% step-up means paying ₹61,159 a month in year 20. That's fine if your pay grows at least that fast. At 15%, you'd need ₹1,42,318 a month by the end, which few budgets can keep up with.
Try it with your numbersSIP CalculatorYour 10% step-up is filled in. Try 5% and 15%, and watch the final corpus and the last year's SIP.
Step-up or a bigger SIP from day one?
Both can reach the same corpus. A flat SIP of about ₹19,906 matches the ₹10,000 step-up plan.
- Step-up asks for less now and more later, when you (probably) earn more. It suits people early in their career.
- A bigger flat SIP puts more money to work early, so it pays in less in total: ₹47.77 L against ₹68.73 L. It suits people whose income is already near its peak.
How to choose your step-up
- Start with your likely raise. If your pay grows 8–10% a year, a 5–10% step-up keeps the SIP the same share of income.
- Check what reaches your bank. Tax and PF take part of every raise. The salary hike calculator shows how much of it lands in hand.
- Step up the rupee amount if percentages feel abstract. "Add ₹1,000 every April" works too.
What this doesn't mean
- 12% isn't guaranteed. It's a round long-run figure; try 9–10% in the calculator for a cautious plan.
- Inflation still applies. Retail inflation was 4.38% in June 2026[1], and over 20 years even 4–5% a year halves what money buys. ₹1.99 Cr in 20 years will buy much less than it does today. Turn on the today's-money view in the calculator to see it.
- A pay cut or career break happens. A step-up is a plan, not a promise; you can pause or lower it any year.
Figures assume a fixed 12% yearly return, compounded monthly, instalments at the start of each month and the step-up applied every 12 months. Tax and exit loads excluded. For illustration only, not investment advice.
Sources
- [1]Consumer Price Index press release, June 2026 (inflation 4.38%) (opens in a new tab)Ministry of Statistics and Programme Implementation · Jul 2026