SIP vs Step-up SIP: which is more beneficial, which is better for you?

The easiest way to invest in mutual funds is through SIP. But while doing SIP, you get many options. Step-up SIP is also one of these options. Often, people are confused by seeing the option of Step-up. Like what is it, what are its benefits, and is it beneficial for them?

What is Step-up SIP?

Step-up SIP means that you increase the amount of your investment by a fixed amount at a fixed time. This time limit can be one year, one month, or any amount. At the same time, how much you want to increase, it also depends on you.

Understand with an example.

Suppose an investor decides through the Step-up option that he will increase the investment amount by 10 percent every year. This means that if the investment amount in the first year is Rs 1 lakh. So in the second year, this investment amount will be Rs 1,10,000.

SIP vs Step-up SIP, which gives more returns?

Through step-up, your investment amount keeps increasing over a fixed time. Therefore, if the investment amount is more, then the profit share will also be more.

Tata Assets Management, Head Product, Shaily Gang, said that suppose an investor does a SIP of Rs 10,000 every month for 20 years. On the other hand, another investor does a step-up of 10% every year along with a SIP of Rs 10,000 every month for 20 years. Even if the normal return is 10 percent, the investor doing step-up will benefit more because the investment amount is more.

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