why step up sip should prefer with salary hike


Step-Up SIP Story: There are two childhood friends Ramesh and Suresh. Both graduated together and got their first Jobs together in different companies. Ramesh and Suresh; both are very close to each other and share investing ideas with each other. They started investment into SIP mutual funds with ₹5000/- per month in the same fund. Five years passed, and both check their investment values. Ramesh has ₹4.83/- lac in their SIP account whereas, Suresh only gets ₹4.02/- lac in their SIP account.

Suresh was upset and amazed that how this is possible because he and Ramesh invested the same amount of ₹5000/- per month in the same mutual fund. He said; he is calling at Asset Management Company and ask; why this happen and how it is possible? Why I am at a loss of ₹80,000/-?

Ramesh replied, do not call Asset Management company. I have more amount in my SIP account is because I increased my SIP every year by 10%.

10% SIP increment, Suresh replied.

Ramesh answered, yes, 10% increment or Step-up SIP concept.

He explains his initial investment of ₹5000/- per month. Further, he gets a salary increment & so he increases his SIP by 10% as well. So, he invested ₹5500/-per month and so on. He continues his step-up SIP with his salary increments.

Ramesh explains the below table to him.

Ramesh 5Y Step up SIP


After understood the concept of Step-up SIP, Suresh asked, In that case, you have invested more than me that is the reason you got more wealth.

Yes, Ramesh replied.

Further added, that the extra wealth has not been made for free. There is a cost attached to it. But irrespective of this cost, it is far-far more effective than conventional SIP.

After understanding the concept of step-up SIP from Ramesh, Suresh started the same. Suresh then decided to start with a 15% increase in SIP every year. In his 6th Year of SIP investment, Suresh started with ₹5750/- pm, and so on.

On the other hand, Ramesh sticks to the 10% step-up SIP every year.

Now, Ramesh & Suresh both started Step-up SIP and checked again after 10 Years.


Ramesh 10Y Step-up SIP


Suresh 5Y normal 5Y Step-up SIP

The total corpus in Ramesh SIP account   = ₹15.5 lac

The Total corpus in the Suresh SIP account = ₹12.57 lac

If Suresh does not initiate the step-up SIP and stick to conventional SIP, then the total corpus in his account would be around ₹10.5/- lac only.


Suresh 10Y Step-up SIP

[DISCLAIMER: The above calculation tables may vary during actual conventional SIP & Step-up SIP calculations. These are only for understanding purposes.]


We all know about the systematic Investment Plan in which we invest amount periodically in mutual funds. Whereas, top-up SIP is nothing just stepping up your SIP by a certain percentage every year. Like ₹5000/- per month in 2019, ₹5000/- + 10% per month in 2020, and so on. This step-up helps in building corpus over the period.

Step-up SIP also called the Top-Up SIP and is the advanced version of Conventional SIP.

The difference of just 10% top-up SIP in Ramesh investment teaches us the concept of top-up SIP investment.

That is the one aspect of investing that many people miss out on. Most of the people do not feel to invest like Ramesh. The main problem is that they are happy with thinking that, I have started SIP that is better than FD. With this thinking, they are misses out the big financial growth.

“Winning at money is 80% behavior and 20% head knowledge.” – Dave Ramsey

Sometimes, people set their targets to build a corpus in a fixed time frame. But they are unable to start with the amount required initially due to fewer salaries. The Step-up SIP provides you the solution that you can start SIP with less amount but increases your investment with time to build your required corpus.top-up


Advisors or experts say that investing in SIP for a longer period is always sufficient. But we all know people’s salary grows over time as well. So, if salary grows, then why not your SIP investments. The 10% increment in the SIP of Ramesh can make a difference at the end of 10 years.

“It is better to end up accumulating more than required sum than ending up with the lower sum.”

Building up a huge corpus over time, step-up SIP is the best way.


  • Help you to save more and create more wealth.
  • Power of Compounding helps your financial goal to reach faster.
  • Help in fighting inflation.


Many of us, start SIP investment; but due to lack of financial knowledge, they continue their small amount of SIP investment for several years. We all know when we grow our experience, our income is growing well during that period. But we never grow our SIP investment. That is the financial indiscipline and laziness.

Ideally, we must do step-up SIP with growing our salaries that will help increase the final corpus size. Stepping up the SIP inculcates the discipline of investing more than your income increases every year. It is better to spend extra money in a channelized way than spent on unnecessary purchases.


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