Step-up SIP Calculator Methodology

Formula

FV = Σ (P × (1 + s)^(y−1)) × ((1 + i)^12 − 1) / i × (1 + R)^(Y−y)

Variables

Symbol	Name	Description
P	Initial monthly contribution	The starting monthly SIP amount in year 1.
s	Annual step-up rate	Percentage by which the monthly amount increases every year (e.g. 10%).
i	Effective monthly rate	(1 + R)^(1/12) − 1, so twelve months compound to exactly the annual return R.
R	Annual return	Expected annual return as a decimal (12% → 0.12).
y	Year index	Iterates from 1 to Y.
Y	Total years	Total investment horizon.

Worked example

₹10,000 starting SIP, 10% annual step-up, 20 years at 12% return → final corpus ≈ ₹1.85 crore (versus about ₹91 lakh for a flat ₹10,000 SIP over the same period, using the same end-of-month convention). The step-up adds about ₹93 lakh, much of it from the extra money contributed.

Assumptions and limitations

Every model leaves something out. Here is what this calculator assumes, and what it does not model, so you can interpret the output honestly:

The step-up applies every 12 instalments (from month 13) and the amount stays constant within each year.
Contributions are made at the end of each month, slightly more conservative than the start-of-month convention of the standard SIP calculator. Return, expense and tax assumptions are otherwise the same.
You can sustain the higher contribution every year. The calculator does not test affordability against income.

Authoritative sources

Where the formula, rates, or framework come from:

AMFI India - Knowledge Center