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Step-Up SIP: What Is It & How Does It Work?

We’ve talked a lot about Systematic Investment Plans (SIPs), and have discussed the benefits and features of the same, in-depth!

We thought it was time to step up our conversation and take a minute to talk about Step Up SIPs as well! So, here we are.

What is Step Up SIP?

Let’s quickly recap what a Systematic Investment Plan is (we promise, it’s relevant!).

A Systematic Investment Plan is an investment strategy that allows you to invest a small amount of money periodically into mutual funds. Simple? Great. Now, how can you step this up? You can mandate your SIP investment amount to grow by a certain percentage periodically. And that’s exactly what a Step Up SIP is.

Step Up SIPs are a popular investment option; one that is gaining a larger and larger fan base by the minute! To opt for Step Up SIP investments, you need to consider all the same things that you do while investing in a regular SIP – your investment budget, your important goals, your investment horizon, and your risk tolerance. But the difference between SIPs and Step Up SIPs is that in the latter you – the investor – are required to specify your Step Up increment, to enable the automated top-up to your investments. There are two modes of setting up a Step Up SIP – 

  1. Via percentage increase.
  2. Through a specified amount.

Let’s take a look at an example to see how a percentage increase step-up SIP would work – 

Principal Amount – ₹10,000 (Yearly)

Interest Rate – 10%

Step Up Percentage – 10%

So, here’s what your investment amounts will look like in the years following your step up (at the steady step up of 10%) – 


Year 1

Year 2

Year 3

Year 4

Year 5

Principal Amount (₹)






Step Up Amount (10%)






Total Investment Amount (₹)






Table 1: Example – Step Up SIP Projection

See how that investment capital increases? That’s how you make big gains, through a slow and steady approach.

Investing in a Step Up SIP means you are not only going to continue your financial discipline, but also have the means to elevate your investment portfolio – slowly, but surely. It is also a useful tool to curb the impulsiveness of the trigger-happy investor, as it prevents you from quickly withdrawing your investments and regularly reallocating your resources – giving your money the time it needs to grow. 

Long-Term Benefits of Step Up SIPs

We always stress the importance of giving your investments time. We might be sounding a bit like a broken record by now, but the truth of the matter is that the importance of time in investing cannot be stressed enough! We are reiterating that as a reminder, that to benefit from SIPs and to be able to step them up – you got to be in it for the long haul!

Here are some benefits that Step Up SIPs can offer you –

  1. Synchronization – You’re killing it at work, and a raise is bound to reflect in next year’s salary! Now is a good time to sync up your income with your investments. Look, you know that the more money you make, the more you should invest – and Step Up SIPs are a great way to facilitate that increment, especially if you want to grow but are still figuring out other investment instruments. Step Up SIPs are mutual fund investments at the end of the day! 

  2. Growth PotentialOur mandatory nod to the miracle of compounding! You know that when compound interest is being applied to your investments, your interest is going to start earning you an interest. So, wouldn’t it be neat if your interest itself could be upped? To do that your principal amount needs to be upped! You see where we’re going with this right? You can optimize your growth potential by opting for Step Up SIPs as they enable a steady increase in your investment amounts over time.

  3. Inflation Protection – Inflation is tricky to understand (but, don’t worry – we’ve got you covered!). In the most fundamental sense, inflation means that the prices of goods and commodities are constantly rising. So naturally, your living expenses (rent, utilities, food, etc.) are going to become costlier. Step Up SIPs and the earnings that are enabled through them make for a decent security buffer to help you when and if inflation and recession start to make waves in our economy. 

In addition to these wondrous benefits, Step Up SIPs are also a great way to make sure that you are getting steady and increasing exposure to the mutual fund market – which is an absolute must for any chance at wealth creation!

Most of you are already investing through SIPs – why not step up your game and try something with a more robust growth potential?


  • How to use Step Up SIPs?

Step Up SIPs can be used by determining the percentage or amount that you want to add to your current investments 

  • What is the step up amount in SIPs?

There is no fixed step up amount in SIPs. However, an increment of at least 10% is recommended for Step Up SIPs.

  • What is the formula for Step Up SIP?

Your step up amount is simply added to your investments from the next installment.

  • Where can I find a Step Up SIP calculator?

Many websites have a Step Up SIP calculator where you can enter your principal amount, tenure, interest rate, and step up percentage to gauge your earnings over a period of time.

  • What is the best Step Up SIP?

Top 200 Fund – TATA AIA, Growth Opportunities Plus Fund – BHARTI AXA, and Blue Chip Fund – HDFC STANDARD are some popular Step Up SIPs in India today.

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