Step-up SIP for a newborn’s education goal
A child born this year has a college date about 18 years away, not 15. A step-up SIP can start at a small debit and rise once a year. The rise is a promise about your salary, not about the child. The 10% return and the 10% step below are both assumptions. Today's fee is not the fee in the year they join.
Last updated: · 4 min read
18 years at an assumed 10%
Bar chart of a flat ₹5,000 SIP ending near ₹30.28 lakh and a 10% step-up ending near ₹59.79 lakh.
- Flat ₹5,000₹30.28 lakh
- 10% step-up₹59.79 lakh
Count to the year they join, not to a round 15
Fifteen years is a common sketch, and it is the wrong horizon for a baby born now if the bill is an undergraduate fee. Eighteen years is still a round number. Use the birthday and the course you have in mind, then put those years in the step-up SIP calculator. This example uses 18 so it is not the 15-year education sketch.
Starting at ₹5,000 with a 10% step, the instalment in year 18 is ₹5,000 × 1.10^17, about ₹25,272 a month. The tool invests about ₹27,35,950 over the 18 years and, at an assumed 10% a year, finishes near ₹59,78,526. A flat ₹5,000 invests ₹10,80,000 and finishes near ₹30,27,840. The extra corpus is the extra cash, compounded. It is not a gift from the step-up feature.
The last instalment is a salary in that year
₹5,000 is a debit you can judge this month. ₹25,272 is a debit in the year the child is 17. The calculator will not check your pay then. If a 10% step is larger than the raises you have actually seen, type a smaller step. A plan that only works if every appraisal matches the step is a wish.
School fees in the years before college are a different bill. They come out of that year's income. Do not point this 18-year SIP at next year's school fee. Redeeming it early to pay a term fee is how the college corpus disappears.
- Flat ₹5,000 for 18 years at 10%: about ₹30.28 lakh.
- 10% step-up: about ₹59.79 lakh, from about ₹27.36 lakh paid in.
- Last instalment on the step-up: about ₹25,272.
Whose name the folio is in does not change the maths
A folio in the child's name, or in yours, is a record-keeping choice. The step-up maths is the same. A gift to a child can have tax and clubbing rules that depend on the source of the money. This page does not compute those. It also does not make the SIP a tax deduction.
If a grandparent funds the SIP, the instalment still has to arrive every month. A promise that is not a mandate will show a gap the calculator never draws, because the calculator assumes each instalment is paid.
Keep a dull rate until the date is close
Ten percent is already an assumption you should be willing to miss. The inflation-goal calculator is where a fee in today's rupees becomes a fee in future rupees, at an inflation rate you type there. Do not type that inflation rate into the SIP as if it were the return.
In the last few years before the fee, money you cannot afford to see fall does not belong in a fresh equity assumption. The 18-year picture is the saving phase. Moving the balance later is a separate decision, and this calculator will not do it for you.
Worked example: ₹5,000 from the year of birth
Eighteen years, assumed return 10% a year, step 10% or zero. Both are inputs, not a school or a college quote.
| Item | Figure |
|---|---|
| Starting instalment | ₹5,000 a month |
| Horizon | 18 years |
| Flat SIP, no step | About ₹30,27,840 from ₹10,80,000 paid in |
| 10% yearly step | About ₹59,78,526 |
| Cash paid into the step-up | About ₹27,35,950 |
| Instalment in year 18 | About ₹25,272 |
Enter ₹5,000, a 10% step, 10% and 18 years. Read the last instalment before you read the corpus. If ₹25,272 is not a debit you can explain, lower the step and accept the smaller ending value.
Sources
Results from FinanceChacha are estimates for planning, not financial or tax advice. Read the disclaimer.
Try the calculators
Open a calculator this guide refers to and run your own numbers.