Raising 500 a month by 5% every year, at an assumed 7% a year, ends at 378,609 after 20 years, against 255,203 if it stays at 500. By the last year the monthly amount is 1,263. Raising it by 10% a year ends at 593,011, with 3,058 a month in the last year.
Most of the difference is simply more money paid in: 198,396 with 5% raises and 343,650 with 10%, against 120,000 kept the same. The rest is growth on the extra.
Three ways to invest over 20 years
The same starting amount and the same assumed return in every row:
| Raised each year by | Monthly amount in the last year | Paid in | Worth at the end | Growth |
|---|---|---|---|---|
| 0% | 500 | 120,000 | 255,203 | 135,203 |
| 5% | 1,263 | 198,396 | 378,609 | 180,213 |
| 10% | 3,058 | 343,650 | 593,011 | 249,361 |
What the example leaves out
The 7% is an assumption, not a forecast. Real returns vary from year to year and are reduced by fees and taxes. In India, raising a monthly investment each year is called a step-up SIP.