If you want to save and grow your money over time, there are different ways to invest. Two common ways are SIP and Step-Up SIP. Let’s break them down in a simple way SIP vs. Step-Up SIP Which is Better?
What is SIP?
A Systematic Investment Plan (SIP) is a way to invest a fixed amount of money regularly, like every month. It’s like putting the same amount of money into a piggy bank every month, except the money is going into a mutual fund that can grow over time.
Benefits of SIP:
- Consistency: You put in a set amount of money regularly without worrying about whether the market (the place where stocks and funds are bought and sold) is going up or down.
- Rupee Cost Averaging: Sometimes the market is low, sometimes it’s high. When the market is low, you buy more units (pieces of the mutual fund), and when it’s high, you buy fewer. Over time, this evens out the price of your investments.
- Easy for Beginners: You don’t need to have a lot of money to start. SIP lets you start small and grow slowly.
Calculate : SIP Calculator with Inflation
https://thebullbook.in/sip-calculator-with-inflation/
What is Step-Up SIP?
A Step-Up SIP is like SIP, but with a twist. You start by investing a certain amount every month, just like SIP, but each year, you increase the amount you put in. It’s like putting more money into your piggy bank every year as you save more.
For example, if you start with ₹1,000 per month, after one year, you might increase it to ₹1,100, then ₹1,200, and so on. This is helpful when your income (money you earn) grows, like if you get a raise at your job.
Benefits of Step-Up SIP:
- Faster Growth: Since you keep adding more money every year, your total investment grows faster, helping you make more money in the long run.
- Matches Your Income: As you earn more money over the years, you can invest more without feeling any extra burden.
- Bigger Returns: Because you are investing more over time, the money you get back can be a lot bigger.
Calculate : Step Up SIP Calculator
https://thebullbook.in/step-up-sip-calculator/
SIP vs. Step-Up SIP: How Are They Different?
| Feature | SIP | Step-Up SIP |
|---|---|---|
| Amount Invested | Same amount every month | Increases every year |
| Flexibility | No change over time | You can increase your investment |
| Returns | Moderate over time | Can grow faster due to increase |
| Best for | Beginners or steady earners | Those whose income grows |
Example: Comparing Returns
Let’s see how much money you could make with both SIP and Step-Up SIP over 20 years, assuming an interest rate of 12%.
Example 1: Regular SIP :
- You invest ₹5,000 every month for 20 years.
- After 20 years, your investment grows to around ₹49.36 lakhs.
Example 2: Step-Up SIP :
- You start with ₹5,000 per month but increase your investment by 10% every year. So, in the second year, you invest ₹5,500 per month, then ₹6,050 in the third year, and so on.
- After 20 years, your money grows to around ₹85.40 lakhs.
SIP vs Step-Up SIP: Which is Better?
- SIP is a good option if you want to start small and keep things simple, without changing the amount you invest.
- Step-Up SIP is great if you expect your income to grow over time and can invest more. You will end up with a bigger amount at the end.
Also Read : How SIP Can Help You Achieve Wealth: A Simple Guide
https://thebullbook.in/how-sip-can-help-you-achieve-wealth-a-simple-guide/
Top performing Mutual Funds in Last 5 Years
| Fund Name | 3 Years Return | 5 Years Return |
|---|---|---|
| Nippon India Small Cap Fund (G) | 31.5% | 38.5% |
| Tata Small Cap Fund (G) | 28.3% | 34.4% |
| Motilal Oswal Midcap Fund (G) | 36.8% | 34.2% |
| Bank of India Manufacturing & Infrastructure Fund (G) | 29.3% | 33.1% |
| SBI Contra Fund (G) | 28.5% | 32.9% |
