Regular vs step-up SIPs: Do ₹1,000 and 10% annual top-ups give you higher XIRR returns or just create a larger corpus?

A step-up SIP can help investors build a larger corpus by increasing contributions over time. But does investing more mean higher returns? Find a comparison of regular SIPs, fixed ₹1,000 top-ups, and 10% annual top-ups data to understand their impact on wealth creation and XIRR over 5 to 25 years.

If you invest through a systematic investment plan (SIP), increasing your contribution as your income and expenses rise can help you keep pace with inflation and stay on track with your financial goals. A step-up SIP allows you to increase your investment periodically by a fixed amount or a percentage.

But does increasing your SIP contribution by a fixed amount of ₹1,000 every year improve returns and wealth creation? A comparison of regular SIPs, fixed top-up SIPs and variable top-up SIPs in the BSE Sensex TRI, based on the latest SIP Analysis report by WhiteOak Capital Mutual Fund, offers some insights.

What is the difference between regular SIP and fixed or variable step-up SIPs?

A normal (or regular) SIP involves investing the same amount every month in a mutual fund scheme. A fixed top-up SIP increases the monthly contribution by a predetermined amount annually, while a variable top-up SIP raises it by a fixed percentage each year.

In a fixed top-up SIP, you increase your monthly contribution by ₹1,000 every year. In a variable top-up SIP, a ₹10,000 monthly contribution increases by 10% annually, rising to ₹11,000 in the second year, ₹12,100 in the third year and so on.

How do the three SIP strategies compare?

The following table compares the investment amount, current value and annualised returns (XIRR) across different investment periods.