Step-up SIP: How you may double, triple and quadruple your investment; know calculations

Mutual Fund Top-up SIP: A lot of investor who don't want direct share market exposure but are keen on market-linked returns opt for mutual funds. Systematic Investment Plan (SIP) is a popular way to invest in mutual funds, where an investor invests a fixed amount every month and get returns on it. However, there is a way to increase your returns faster and that can be done through a step-up SIP. In a step-up SIP, you increase your SIP investment every year at the rate you want. You can increase the SIP amount annually by five per cent, 10 per cent or 15 per cent, or up to the level of affordability.   

You can boost the speed of your return by opting for a step-up SIP since SIP investment gives you compound growth where the increased SIP will give you faster returns in the long run. 

If you opt for a top-up SIP, you can double, triple or quadruple your investment even if you get a 12 per cent return on your SIP investment. Know here what you have to do.

How step-up SIP works 

Normally, when you start a SIP, you invest a fixed amount every month.

Suppose you start a SIP of Rs 5,000 for 10 years, you will deposit only Rs 5,000 every month, but in a step-up SIP, you can add a 10 per cent e.

It means, if for the first year, the your SIP is Rs 5,000, for the second year, your SIP will be Rs 5,500 a month 

How you can multiply your returns

If you start with a SIP of Rs 5,000; increased the amount by 10 per cent every and get 12 per cent annualised return on your SIP investment, it will double in a little over 12 years.

In 12 years, you will invest Rs 12,83,057 while your estimated capital gains will be Rs 12,29,114. It means, the total value of your return will be Rs 25,12,171.  

If you continue investing for nearly nine years more, or a total 21 years, your investment through the step-up SIP will be Rs 38,40,150, the estimated capital gains will be Rs 77,96,275 and the total value of yoru return will be Rs 1,16,36,425, which will be more than three times your investment.

If you continue your investment for the next eight years, or a total of 29 years, your total investment will be Rs 89,17,856, the estimated return at the rate of 12 per cent growth will be Rs 2,93,79,696, and the estimated total amount will be Rs 3,82,97,552, which is 4.29 times of your invested amount.

Twenty-nine years is quite a long investment period, but if one starts investing at 25 years of age, they can reach that target by the time they turn 54.