A Regular SIP involves investing a fixed amount every month for the entire investment horizon. A Step-Up SIP (also called Top-Up SIP) allows you to increase your monthly SIP amount at regular intervals, typically annually. While both approaches harness the power of compounding, a step-up SIP aligns better with the natural progression of your earning capacity.
How Step-Up SIP Works
In a step-up SIP, you choose a base monthly amount, an annual increment percentage, and the investment duration. For example, you might start with Rs 10,000 per month and increase it by 10 percent every year. In the second year, your monthly SIP becomes Rs 11,000; in the third year, Rs 12,100, and so on. This gradual increase mirrors salary hikes most professionals receive.
Most AMCs and platforms like Groww, Zerodha, and Kuvera support step-up SIP functionality where you can set the annual increase at the time of registration.
The Numbers: Regular vs Step-Up SIP
Let us compare a Regular SIP of Rs 10,000 per month with a Step-Up SIP starting at Rs 10,000 per month with a 10 percent annual increase, both over 20 years at 12 percent annual return.
| Parameter | Regular SIP | Step-Up SIP (10% increase) |
|---|---|---|
| Monthly Start Amount | Rs 10,000 | Rs 10,000 |
| Total Invested | Rs 24,00,000 | Rs 68,73,000 |
| Corpus at 20 Years | Rs 1,00,00,000 approx | Rs 2,10,00,000 approx |
| Wealth Gain Ratio | 4.2x | 3.1x |
| Additional Corpus | Baseline | +Rs 1.1 Crore |
When Should You Choose Step-Up SIP?
- You are a salaried professional expecting regular annual increments
- You want to align your investment growth with income growth
- Your financial goals require a larger corpus than a fixed SIP can deliver
- You are in your 20s or early 30s with decades of earning potential ahead
- You want to combat inflation by increasing your investment amount over time
When Regular SIP Makes More Sense
A regular SIP is better suited for those on a fixed income, retirees investing from a pension, or individuals who already have a large SIP amount and prefer consistency. If your income does not grow predictably, committing to an annual increase may create financial stress.
You do not have to choose one or the other permanently. You can start with a regular SIP and convert it to a step-up SIP later when your income situation improves.
Practical Recommendation
For most working professionals in India, a step-up SIP with a 10 percent annual increase is the optimal strategy. It does not overburden you in the early years while ensuring your investments grow meaningfully over time. Use our Step-Up SIP Calculator to see exactly how much wealth you can create with your specific numbers.
A 10 percent annual step-up in your SIP is often less than the average salary increment in India, making it a painless way to accelerate wealth creation.