Step-up investing

Asha sets up a monthly investment of ₹50,000. Five years later she is still investing ₹50,000. Her salary has gone up every year since. Her rent has gone up, and so has what she spends on weekends. The investment is the only line in her budget that never got a raise.

A step-up fixes this. You decide once that your monthly investment rises by a set percentage every year, and then it happens without another decision. With a step-up of 10%, her instalment goes from ₹50,000 to ₹55,000 in the second year. That is ₹5,000 more a month, in a year when her pay also rose.

What it adds up to

All three rows start with the same instalment in the same month. The difference comes only from the yearly raise.

A flat instalment shrinks

An instalment that never changes gets smaller in real terms every year. At 6% inflation, ₹50,000 in 25 years buys what ₹11,650 buys today. A step-up equal to inflation only keeps your investing level. A step-up above inflation is what increases it.

What it does to the date

Why it is easier than it sounds

Raising your investment by cutting what you already spend is hard, because you feel the loss. Raising it out of a salary increase is different. You never had that money in your monthly budget, so you don't miss it. The step-up has to take effect in the same month as the raise. Once the extra income has been in your account for a few months, you will already be spending it.

Open the plan with a 10% step-up