Most of the people know or have heard about SIP. But have you ever heard about Step Up SIP? In today’s article, we are going to discuss it. Not only that, SIP or Step-Up SIP, we’ll also tell you what’s best for you.
Regular SIP
If you want to become a millionaire in 20 years through regular SIPs, then you have to invest at least Rs 11,000 every month. Investing Rs 11,000 every month for 20 consecutive years, you will invest a total of Rs 26,40,000. The average return of SIP is considered to be 12 percent. If you calculate according to 12% returns, then you will get a total of Rs 83,50,627 as interest in 20 years. In this way, after 20 years, together with the invested amount and interest, you will become the owner of Rs 1,09,90,627.
Step Up SIP
Step-up SIP is also called top-up SIP. To make money in it, you have to put top-up in SIP from time to time. Suppose you start an SIP with Rs 5,000 and also put a top-up of 10% in the SIP amount every year. In this way, you have to invest in your current SIP by increasing the amount by 10% every year. You will have to increase, and with this trick, you will add a fat fund in a few years. Understand how-
Suppose you start an SIP of Rs 5,000, then deposit Rs 5,000 every month for a year. Then next year you have to increase 10% of 5,000, i.e., 500 rupees. In this case, your SIP for the next year, i.e., the second year, will be Rs 5,500. Then in the next year, i.e., in the third year, 10 percent of Rs 5,500, i.e., Rs 550, will have to be increased. In this way, your SIP will be Rs 6,050 in the second year. In this way, you have to increase 10 percent of the existing SIP every year.
If you opt for Step-Up SIP and aim to add Rs 1 crore in 20 years, you need to start investing in it from Rs 5,100. Run an SIP of $5,100 for 1 year, then top up every year at the rate of 10%, as you were mentioned in the example above. In this way, your total investment in 20 years will be Rs 35,05,230. On this, you will get a return of Rs 66,38,015, and in 20 years you will become the owner of Rs 1,01,43,245.
Keep this in your mind
SIP is a market-linked scheme. Through this, investment is made in mutual funds. In such a situation, you have to keep in mind that the returns of SIP are also market-based. Meaning returns cannot be guaranteed in this. However, experts consider the average return of SIP in the long term to be around 12 percent, on the basis of which we have made this calculation. But these returns can be more or less depending on the market.
