What a 15% step-up does to a twenty-year SIP
Most conversations about improving investment outcomes are about returns: which fund, which sector, which moment to enter. Returns are the one variable you do not control. The instalment is the one you do.
The comparison
Take ₹25,000 a month for twenty years at an assumed 11% a year. Then take the same starting instalment with a 10% annual increase — roughly what an average salary increment allows, and less than many receive.
| Flat ₹25,000 | With 10% annual step-up | |
|---|---|---|
| Total invested | ₹60,00,000 | ₹1,71,82,500 |
| Projected value | ₹2,16,00,000 | ₹4,47,27,938 |
| Difference | — | More than double |
The step-up investor puts in considerably more, so a larger outcome is not surprising. What is worth noticing is that the increase is affordable at every individual step — it is only ever ten per cent more than last year, at a point when income has also risen.
Arjun Kapoor
Financial planner
Arjun writes about retirement planning and the arithmetic of long-term saving. He has been a financial planner for eleven years and remains unconvinced by anything that promises certainty.
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