How a ₹5,000 SIP Reward You With ₹93 Lakhs After 20 Years?

Many investors in India start their SIP journey with enthusiasm, triggered by a financial goal, employer-assisted mutual fund setup, or simply wanting to save more regularly. A common starting figure is ₹5,000 per month because it feels manageable and affordable early in a career, especially for young professionals. 

However, as salaries rise with promotions and experience, many keep that ₹5,000 SIP unchanged, believing that consistency is discipline. This is the classic set-and-forget trap, where life inflates around the investment while the investment stays static.

Contrast that with what actually happens when you grow your contribution over time. A simple case study shows the impact: an investor who started a ₹5,000/month SIP two decades ago that stayed fixed could build a corpus of around ₹46 lakh assuming 12% annual returns. 

But the investor who increased the same SIP by just 10% every year, keeping pace with salary increases, would have built over ₹93 lakh in the same period, more than double the wealth from the same starting point.

This stark wealth difference highlights why a superficial approach to investing can quietly cost investors lakhs without them realising it.

Why a Step-Up SIP Matters: The Cost of Keeping SIP Flat

The essence of compounding is not merely time, but increased contributions over time — because the more you bring into the system earlier, the larger the compounding base. When you maintain a flat SIP despite salary growth, you are effectively choosing less money invested earlier, which significantly weakens the power of compounding.

Impact of SIP Step-Up vs Flat SIP over 20 Years

Before we show the table, it’s important to understand that SIP returns are not linear; annual contributions added earlier have more time to grow. The table below compares flat SIP contributions versus increasing the SIP by 10% each year, assuming an average return of 12% per annum (a reasonable assumption for long-term equity SIPs). Recent financial calculators and expert investment guides often use similar assumptions to illustrate step-up benefits.
 

This comparison shows how stepping up your SIP — even by a modest 10% each year — can double your accumulated wealth over a long horizon. While flat SIPs keep you disciplined in saving, they don’t keep pace with your financial growth or inflation, leading to missed opportunity gains.

The Psychology Behind Staying Flat

Why do so many SIPs remain unchanged even as incomes rise? Behavioural finance research consistently shows human beings anchor to initial decisions, especially ones that feel “safe” or “comfortable”. Investors start a SIP when their finances feel stable and then never revisit it; unlike monthly expenses (rent, subscriptions, food), contributions don’t auto-inflate unless you set that up.

Another reason is mental accounting: once an investor labels ₹5,000 as “the investment amount,” it becomes psychologically difficult to step beyond that figure, even if they are paying much more for discretionary spending like gadgets, dining, or travel. The result is that lifestyle inflation outpaces investment inflation, leaving a gap between income capacity and investment discipline.

This mindset trap is avoidable with tools like step-up SIP facilities offered by mutual fund platforms, which automatically increase your SIP amount by a set percentage every year, keeping your investment in sync with your financial life.

What Indian SIP Trends Tell Us

SIPs have become a mainstream investment method in India. Monthly SIP flows have surged to record levels, monthly contributions crossed ₹29,445 crore recently, reflecting the growing participation of investors beyond traditional metro cities.

Analyses of SIP performance indicate that the probability of generating more than 10% returns increases significantly over longer horizons, underscoring the value of long-term disciplined investing. For example, over 10-year horizons, SIPs delivered returns exceeding 10% nearly 89% of the time.

Yet despite strong long-run performance, many investors either discontinue SIPs prematurely during volatile markets or never increase contributions, both behaviours that erode potential gains. An investor report shows significant SIP stops in some periods due to volatility or panic, which further highlights the importance of consistency with growth.

A ₹5,000 SIP That Stays ₹5,000

Imagine two investors, A and B, both starting at age 25 with a ₹5,000 monthly SIP:

• Investor A keeps the SIP at ₹5,000 throughout the next 20 years.
• Investor B increases the SIP by 10% each year, reflecting salary growth.

Both invest through equity mutual funds with an average CAGR of 12%. At the end of 20 years:

• Investor A’s corpus grows to around ₹46 lakh on ₹12 lakh invested.
• Investor B’s corpus exceeds ₹93 lakh on around ₹34 lakh invested.

Even though both started identically, the wealth difference of ₹47 lakh comes purely from investing more when you could afford more. This example illustrates not only compounding but also investment elasticity, increasing what you can afford to save as income grows.

When to Increase Your SIP?

Financial planners often recommend increasing your SIP:

• When you receive a salary hike (even 10–15%).
• When bonuses or incentives are credited.
• When your high-interest debt (e.g., credit card or personal loan) is paid off — freeing up cash flow.
• When you change jobs or get a promotion.

The idea is not to stretch your finances beyond comfort but to ensure your saving rate grows roughly in step with your earning capacity. This helps SIPs work on both discipline and elasticity, strengthening long-term wealth creation.

Conclusion

Systematic Investment Plans are powerful instruments for long-term wealth creation, largely because they harness rupee-cost averaging and time in the market. But you don’t maximise this power by keeping your SIP static if your income and financial capacity rise. On the contrary, failing to increase your SIP regularly, even by a modest 10% per year — can cost you lakhs of rupees in future wealth, as a comparison of flat vs step-up SIP outcomes clearly shows.

Disciplined investing is more than consistency; it’s about evolving your contributions as your financial life evolves. Whether through step-up SIP features on mutual fund platforms or annual manual revisions tied to salary growth, increasing your SIP ensures you don’t leave significant gains on the table. Start with discipline, but don’t let your discipline become static, let it grow with you.
 

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LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.