Rs 14,000 SIP vs Rs 7,000 Step-Up SIP: Which will take faster to Rs 12.44 crore corpus in long term? See details to know
SIP vs Step-Up SIP: To build a substantial corpus in the long-term, there are plenty of investment options available in the market. Among all these options, you can choose SIP or opt for step-up SIP. In this write-up, we will compare the returns from both types of SIPs over 25, 30, and 35-year periods.
SIP vs Step-Up SIP: To build a substantial corpus in the long term, there are plenty of investment options available in the market. Among all these options, you can choose SIP or opt for step-up SIP. SIP, or Regular SIP, is a systematic investment plan offered by many mutual funds, allowing investors to invest small amounts periodically instead of making lump-sum investments. On the other hand, Step-Up SIP is a type of SIP where investors can automatically increase the SIP amount after a chosen time period (such as 6 or 12 months).
(Disclaimer: This is not investment advice. The calculations presented are projections. Please do your own due diligence or consult a financial advisor for personalized advice.)
Comparison between SIP and Step-Up SIP
In this write-up, we will compare the returns from both types of SIPs over 25, 30, and 35-year periods.
Assuming an Annualised Return of 12%
For all the calculations, we are assuming an average annual return rate of 12 per cent.
Regular SIP: How much you accumulate in 25 years with Rs 14,000 monthly investment
Total Investment: Rs 42,00,000
Expected Capital Gain: Rs 2,23,66,891
Total Corpus Received: Rs 2,65,66,891
Regular SIP: How much you accumulate in 30 years with Rs 14,000 monthly investment
Total Investment: Rs 50,40,000
Expected Capital Gain: Rs 4,43,78,793
Total Corpus Received: Rs 4,94,18,793
Regular SIP: How much you accumulate in 35 years with Rs 14,000 monthly investment
Total Investment: Rs 58,80,000
Expected Capital Gain: Rs 8,50,53,767
Total Corpus Received: Rs 9,09,33,767
Step-Up SIP Calculations
Now, let’s look at the Step-Up SIP and calculate how much you can accumulate with an initial investment of Rs 7,000 per month, increasing by 10 per cent annually over 25, 30, and 35 years.
Step-up SIP: How much you accumulate in 25 years with Rs 7,000 monthly investment
Total Investment: Rs 82,61,153
Expected Capital Gain: Rs 2,16,67,670
Total Corpus Received: Rs 2,99,28,823
Step-up SIP: How much you accumulate in 30 years with Rs 7,000 monthly investment
Total Investment: Rs 1,38,17,498
Expected Capital Gain: Rs 4,80,21,367
Total Corpus Received: Rs 6,18,38,865
Step-up SIP: How much you accumulate in 35 years with Rs 7,000 monthly investment
Total Investment: Rs 2,27,66,047
Expected Capital Gain: Rs 10,16,02,530
Total Corpus Received: Rs 12,43,68,577
Important Note For SIP Investors
Both, SIP and Step-Up SIP are market-linked investments in mutual funds that means returns depend on market performance and cannot be guaranteed. In long-term, SIPs typically offer an average return of around 12 per cent, however, actual returns can vary depending on market conditions.
SIP vs Step-Up SIP: Conclusion
Both Regular SIP and Step-Up SIP are effective for wealth-building. However, Step-Up SIP is more aggressive, helping achieve financial goals faster with smaller investments compared to SIP.
SIP vs Step-Up SIP: Which one you can choose?
The choice between Regular and Step-Up SIP depends on your financial goals, risk tolerance, and contribution capacity.