Fixed SIP vs Step-up SIP: What an Annual Increase Changes

A step-up changes the contribution schedule

A fixed SIP keeps the monthly contribution unchanged. A step-up SIP raises that monthly amount at a stated interval; in this example, the increase happens once after every 12 contributions.

The step-up projection can be higher for two separate reasons: more money is contributed, and those additional contributions receive modelled growth. Calling the entire difference 'extra return' would confuse capital added with projected growth.

What the worked comparison assumes

• Starting monthly contribution: ₹5,000 in both cases.
• Fixed SIP increase: 0% a year.
• Step-up SIP increase: 10% once a year.
• Duration: 10 years.
• Assumed annual return: 12%, converted to the site's monthly convention.
• Contribution timing: beginning of each month; fees and taxes excluded.

Worked example: fixed ₹5,000 vs 10% annual step-up

Separate additional contributions from projected growth

The step-up schedule contributes about ₹3,56,245 more over the decade. Its projected growth is about ₹1,69,222 higher. Together those two changes account for the roughly ₹5,25,468 difference between the projected future values, subject to displayed rounding.

The annual increase also means the monthly contribution reaches about ₹11,790 in year 10. A projection should not hide that higher future cash commitment behind the larger final value.

What the comparison can and cannot show

The table shows the mathematical effect of one fixed escalation schedule. It does not show whether a future contribution will fit a person's income or whether the underlying investment will deliver the assumed return.

Review the limits of smooth SIP projections before treating either value as an expected outcome.