How it works
A systematic investment plan (SIP) invests a fixed amount at regular intervals — usually monthly — into a mutual fund, ETF or brokerage account. The step-up variant raises that amount each year, modelling salary increases that flow into the plan before lifestyle inflation captures them. The engine compounds monthly at your expected return, applying the stepped-up contribution for each of the 12 months of its year, and splits the final balance into what you deposited versus what growth added. On the defaults — $10,000 per month to start, 12% expected annual return, 15 years, 10% annual step-up — future value is $8,597,871. Total invested is $3,812,698 and estimated gains are $4,785,173. The step-up is the quiet multiplier: a flat SIP with the same starting $10,000 and no step-up finishes near $4,995,802 on $1,800,000 invested over the same horizon — less than half the corpus. Returns are not guaranteed; 12% is an equity-heavy long-run assumption common in Indian mutual-fund marketing and global index history, but a bad decade can deliver far less. The honest use is comparing scenarios, not promising outcomes. SEBI and SEC both require past performance disclaimers for a reason. Pair with lump sum vs DCA when deploying a windfall, the compound interest calculator for a simpler contribution model, and the retirement calculator when the horizon is age-based rather than years-based.
Formula
Each month: balance = balance × (1 + rate/12) + monthly contribution
Year y monthly amount = base monthly × (1 + stepUp/100)^(y−1)
Gain = future value − total invested
Worked example — defaults ($10k/mo · 12% · 15y · 10% step-up)
Future value = $8,597,871
Total invested = $3,812,698
Estimated gains = $4,785,173
Flat SIP comparison (no step-up)
Future value ≈ $4,995,802 on $1,800,000 invested
Tips
- Automate the step-up on your raise anniversary — the extra must reach the plan before the budget absorbs it.
- Run 10% and 12% return scenarios; plan around the lower number and treat the upper as upside.
- Compare flat vs step-up in the same session — the gap shows what your raises are worth if invested.
- Currency is symbolic: ₹10,000/month in India or $10,000/month in the US uses identical math.
- Fees and taxes reduce the net; the engine models gross return — subtract your expense ratio mentally.
Frequently asked questions
- What is the SIP corpus on the defaults?
- About $8,597,871 after 15 years of monthly investing starting at $10,000, stepping up 10% each year, compounded at 12% monthly. You personally deposit $3,812,698; the rest is growth.
- What is a step-up SIP?
- A SIP that increases the monthly amount by a set percentage each year — 10% on the defaults means $10,000 in year one, $11,000 average monthly in year two, and so on. It matches how salaries grow and dramatically lifts the final corpus versus a flat contribution.
- How much does the step-up matter versus a flat SIP?
- On the same defaults without step-up, the corpus is about $4,995,802 versus $8,597,871 with step-up — a difference of roughly $3.6 million, driven by both higher contributions and more dollars compounding longer.
- What return should I assume?
- Equity-heavy portfolios have historically returned 10–13% in some markets over 15+ years, but there is no guarantee. Run the calculator at 10% and 12%; if only the lower scenario meets your goal, you are planning honestly.
- Is SIP the same as dollar-cost averaging?
- Mechanically similar — regular fixed investments over time. SIP usually describes ongoing salary-driven investing; DCA often describes deploying a lump sum gradually. Both remove timing decisions and benefit from buying across market cycles.