Elearnmarkets - Financial Market Learning
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Learn On Elearnmarkets
Elearnmarkets - Learn Stock Market, trading, investing for Free
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Learn On Elearnmarkets
Elearnmarkets - Learn Stock Market, trading, investing for Free
No Result
View All Result
Home Basic Finance
Step Up SIP v/s Static SIP Investment

Step Up SIP v/s Static SIP Investment

Elearnmarkets by Elearnmarkets
May 9, 2023
in Basic Finance, ETFs & Mutual Funds
Reading Time: 5 mins read
1
1.5k
VIEWS
Share on FacebookShare on TwitterShare on WhatsApp

Systematic Investment Plan (SIP investment) has, over the years, proved itself to be one of the best ways to create long-term wealth, without affecting their day-to-day lives. This innovation in the mutual funds’ industry accounts for discipline and long-term approach in the financial world. If you use this equity mutual funds investment, you get the benefit of rupee cost averaging. It cuts down your cost of holding over a long period of time. To steer clear of market volatility, SIP investment is your financial vehicle. Step up your investment game and learn more about wealth management. Join this certified course: NSE Academy Certified Financial Planning & Wealth Management.

Also read: Why should we invest in Systematic Investment Plans (SIP) ?

When we compare static SIP investment with a step up SIP, we see that a step up SIP has no difference except, the monthly contribution increases yearly during the SIP investment tenure based on pre-set parameters, like a fixed sum or fixed percentage.

For instance, the step up SIP percentage is 10% and the contribution in year 1 is Rs.1000, the contribution in year 2 would be 1100, 1210 in year 3 and so on. The monthly contribution in a static SIP investment remains constant over the years.

You may also read: What should be your Mutual Fund Investment strategy for 2018-19

Why not static SIP investment?

The only issue with a static SIP investment, with respect to step up SIP, is that it does not account for a person’s increase in income-earning capacity. Hence, the savings don’t remain constant, it also increases with time. A step up SIP covers this aspect in a person’s investment and encourages you to contribute more periodically as per your capability, to maximize wealth for you in the long-run.

Problem with Static SIP Investment

Step Up SIP over Static SIP investment

Step up SIP includes inflation, which erodes the value of money while estimating the wealth. It would be wise to step up any investment with time. Step up SIP does include several advantages over static SIP investment:

Advantages of Step Up SIP

Does Step Up SIP perform better?

Step up SIP incorporates the power of compounding so that the investors can reach their financial goals sooner. People are, sometimes, too lazy to voluntarily increase their SIP investment contribution. They don’t integrate their income growth with their investment plan. That’s when step up SIP steps in as an automated function that facilitates long-term corpus-creation.

Join TMP Join TMP Join TMP

Read also: 5 Steps to Financial Peace

Now let’s take a look at the practical difference in returns between the two SIPs:

Step Up SIP v/s Static SIP Investment 1

 This shows that step up SIP gives higher returns.

You can also calculate returns of SIP investment using our SIP Calculator.

Wait, is it really all positive?

Wealth Ratio is the ratio of wealth generated by the total amount invested. Now, in the table above, you can see that the wealth generated is higher in a static SIP investment than in a step up SIP. This happens because the higher SIP amount in a step up SIP is compounding for a smaller period of time than the lower amounts in a conventional SIP investment. So, step up SIP investments are not able to create the wealth it should. In fact, if you keep increasing your step up SIP percentage, the wealth ratio actually keeps falling.

You can read: Mutual Funds risk- you may not know

In conclusion

We’d like to say, yes, to be realistic and instill financial discipline in our lives, step up SIP investment is necessary. It helps us generate a long-term corpus of wealth and fills the gaps of a traditional SIP investment. Step up SIP makes attaining our financial long-term goals easier and faster. People are  not yet aware that a facility to increase your SIP investment contribution exists, due to its lack of popularity. So it’s time to step up your investment game!

In order to get the latest updates on Financial Markets visit Stockedge

Tags: english
ShareTweetSend
Previous Post

Secrets of Boosting Your Trading Skills through Technical Analysis Indicators

Next Post

Investment Planning: How it works to make better financial life

Elearnmarkets

Elearnmarkets

Elearnmarkets (ELM) is a complete financial market portal where the market experts have taken the onus to spread financial education. ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. You can connect with us on Twitter @elearnmarkets.

Related Posts

5 Best Practices in Your First Year of Stock Market Trading 2
Basic Finance

5 Best Practices in Your First Year of Stock Market Trading

May 15, 2023
1.5k
Understand the MSCI Index and its Rebalancing Impact on the Indian Stock Market 3
Basic Finance

Understand the MSCI Index and its Rebalancing Impact on the Indian Stock Market

May 12, 2023
2.2k
Tax Planning - 7 Changes in the Indian Financial Environment that you need to know this Financial Year! 4
Basic Finance

Tax Planning – 7 Changes in the Indian Financial Environment that you need to know this Financial Year!

April 18, 2023
1.3k
Last-Minute Tax Planning- 5 Common Mistakes that Taxpayers Make 5
Basic Finance

Last-Minute Tax Planning- 5 Common Mistakes that Taxpayers Make

April 12, 2023
1k

Comments 1

  1. froleprotrem says:
    3 years ago

    A powerful share, I simply given this onto a colleague who was doing somewhat analysis on this. And he in fact purchased me breakfast because I found it for him.. smile. So let me reword that: Thnx for the deal with! However yeah Thnkx for spending the time to discuss this, I really feel strongly about it and love reading extra on this topic. If possible, as you become experience, would you thoughts updating your weblog with more particulars? It is highly useful for me. Massive thumb up for this weblog post!

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Follow Us

Facebook-f Twitter Instagram Linkedin-in Youtube Telegram

Register on Elearnmarkets

Continue your financial learning by creating your own account on Elearnmarkets.com

Register Free Account

Download App

Categories

  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Technical Analysis
  • Marketshala
  • Miscellaneous

Popular On Elearnmarkets

  • Market Superheroes:
  • Vivek Bajaj
  • Chetan Panchamia
  • Ashish Kyal
  • Premal Parekh
  • Abhijit Paul
  • Jegan
  • Sivakumar Jayachadran
  • Vishal Malkan
  • Jyoti Budhia
  • Vivek Gadodia
  • Vishal Mehta
  • Piyush Chaudhry
  • Santosh Pasi
  • Gomathi Shankar
  • Market Superheroes:
  • Vivek Bajaj
  • Chetan Panchamia
  • Ashish Kyal
  • Premal Parekh
  • Abhijit Paul
  • Jegan
  • Sivakumar Jayachadran
  • Vishal Malkan
  • Jyoti Budhia
  • Vivek Gadodia
  • Vishal Mehta
  • Piyush Chaudhry
  • Santosh Pasi
  • Gomathi Shankar
  • Courses:​
  • Options Trading
  • Dow Theory
  • Momentum Trading
  • Stock Investing
  • Stock Market for Beginners
  • Harmonic Chart Patterns
  • Algo Trading
  • Elliot Wave Theory
  • Advanced Excel
  • Cryptocurrency
  • NSE Certification Course
  • Courses:​
  • Options Trading
  • Dow Theory
  • Momentum Trading
  • Stock Investing
  • Stock Market for Beginners
  • Harmonic Chart Patterns
  • Algo Trading
  • Elliot Wave Theory
  • Advanced Excel
  • Cryptocurrency
  • NSE Certification Course
  • Webinars:
  • Bank Nifty Scalping
  • Intraday Trading Strategies
  • Options Trading Strategies
  • Options selling
  • Price Action
  • Relative Strength
  • Tax Planning
  • Options Buying
  • Growth Stocks
  • Portfolio Management
  • Relative Strength Index
  • Risk Management
  • Renko Charts
  • Crude Oil
  • Traders Psychology
  • Moving Average
  • Multibagger Stocks
  • Webinars:
  • Bank Nifty Scalping
  • Intraday Trading Strategies
  • Options Trading Strategies
  • Options selling
  • Price Action
  • Relative Strength
  • Tax Planning
  • Options Buying
  • Growth Stocks
  • Portfolio Management
  • Relative Strength Index
  • Risk Management
  • Renko Charts
  • Crude Oil
  • Traders Psychology
  • Moving Average
  • Multibagger Stocks
  • Free Learning Modules:
  • Intraday Trading
  • Options Scalping
  • Swing Trading
  • Financial Modelling
  • RSI Indicator
  • Bollinger Bands
  • Pricing of Futures
  • Personal Finance
  • Initial Public Offerings (IPO)
  • Value Investing
  • Technical Indicators
  • Candlesticks
  • Chart Patterns
  • Option Greeks
  • ELSS Funds
  • Banking and Insurance
  • Real Estate
  • Gold
  • Free Learning Modules:
  • Intraday Trading
  • Options Scalping
  • Swing Trading
  • Financial Modelling
  • RSI Indicator
  • Bollinger Bands
  • Pricing of Futures
  • Personal Finance
  • Initial Public Offerings (IPO)
  • Value Investing
  • Technical Indicators
  • Candlesticks
  • Chart Patterns
  • Option Greeks
  • ELSS Funds
  • Banking and Insurance
  • Real Estate
  • Gold
  • Book Summaries:
  • Rich Dad Poor Dad
  • Psychology of Money
  • The Intelligent Investor
  • The Richest Man in Babylon
  • Think and Trade Like a Champion
  • Value Investing and Behavioural Finance
  • Trading in the Zone
  • Learn to Earn
  • Book Summaries:
  • Rich Dad Poor Dad
  • Psychology of Money
  • The Intelligent Investor
  • The Richest Man in Babylon
  • Think and Trade Like a Champion
  • Value Investing and Behavioural Finance
  • Trading in the Zone
  • Learn to Earn
  • Tools:
  • CAGR Calculator
  • SIP Calculator
  • eLearnOptions
  • Future Value Calculator
  • Present Value Calculator
  • Atal Pension Yojana
  • Cost of Delay Calculator
  • Become a Crorepati
  • Tools:
  • CAGR Calculator
  • SIP Calculator
  • eLearnOptions
  • Future Value Calculator
  • Present Value Calculator
  • Atal Pension Yojana
  • Cost of Delay Calculator
  • Become a Crorepati

© 2023 Elearnmarkets. All Rights Reserved

  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling
  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

Get Elearnmarkets App

No Result
View All Result
  • Article Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • Hindi
    • Bengali
    • English
  • Courses
  • Webinars

© 2020 Elearnmarkets All Rights Reserved