QuickUtils10 - Financial Blog

Systematic Investment Plans (SIPs) are the most popular way to build wealth. But did you know that just one small "step-up" can significantly increase your final corpus? Today, we're not going to give financial advice, but rather, we'll understand the exact math and compounding behind it. The real math of a normal SIP vs. a step-up SIP (H2) In a normal SIP, your monthly amount remains fixed (e.g., ₹5,000 per month for 10 years). However, in a Step-Up SIP (or Top-up SIP), you increase your investment by a fixed percentage every year. For example, if your salary increases by 10% every year, you can also increase your SIP amount by 10% every year: Year 1: ₹5,000/month Year 2: ₹5,500/month (10% increase) Year 3: ₹6,050/month How does the dual-compounding effect work?  Two powerful mathematical tricks when you use Step-Up SIP The rules work together: 1. Interest on Interest: Interest is charged on your old deposited principal and it is compounded. 2. Larger base amount: Yo...