SIP Calculator
Calculate your SIP and Lumpsum investment returns with our interactive calculator
A Systematic Investment Plan (SIP) is a disciplined approach to investing in mutual funds. Instead of investing a large sum at once, you invest a fixed amount at regular intervals (monthly, quarterly, etc.). This strategy offers several advantages for long-term wealth creation.
Key Benefits of SIP
- Rupee Cost Averaging: By investing regularly, you buy more units when prices are low and fewer when prices are high, averaging out your cost per unit over time.
- Power of Compounding: Your returns generate their own returns, creating exponential growth over long periods.
- Disciplined Investing: Automate your investments and build wealth systematically without timing the market.
- Flexibility: Start with as little as Rs 500 per month and increase as your income grows.
- Lower Risk: Spreading investments over time reduces the impact of market volatility.
SIP vs Lumpsum: Which is Better?
Both have their place in a well-rounded investment strategy:
- Choose SIP if: You have regular income, want to invest systematically, or are new to investing. SIP works well in volatile markets.
- Choose Lumpsum if: You have a large amount available (bonus, inheritance, etc.) and market valuations are attractive. Lumpsum can generate higher returns in a rising market.
💡 Pro Tip: Step-up SIP
Consider increasing your SIP amount annually (step-up SIP) to align with your growing income. Even a 10% annual increase can significantly boost your wealth creation. For example, a Rs 10,000 monthly SIP with 10% annual step-up can create 30-40% more wealth over 20 years compared to a regular SIP!
How to Use This Calculator
- Choose between SIP or Lumpsum investment mode
- Enter your investment amount and expected return rate
- Set your investment time period (longer is better for wealth creation)
- For SIP, optionally enable step-up to see the impact of increasing investments
- Review the wealth projection chart to visualize your investment growth
Disclaimer: Past performance is not indicative of future results. The calculator provides estimates based on assumed returns. Actual returns may vary based on market conditions and fund performance. Please consult a financial advisor before making investment decisions.
What is a SIP (Systematic Investment Plan)?
A Systematic Investment Plan (SIP) is a method of investing in mutual funds where you invest a fixed amount regularly (monthly, quarterly, etc.) instead of making a one-time lump sum investment. This disciplined approach helps in rupee cost averaging and reduces the impact of market volatility.
What is the difference between SIP and Lumpsum investment?
SIP involves investing a fixed amount at regular intervals, while lumpsum is a one-time investment of a large amount. SIP is ideal for regular income earners and helps average out market fluctuations. Lumpsum works better when you have a large amount available and market conditions are favorable.
What is Step-up SIP?
Step-up SIP allows you to increase your SIP amount periodically (usually annually) by a fixed percentage or amount. This helps you align your investments with your growing income and accelerates wealth creation. For example, if you start with Rs 10,000 monthly SIP with a 10% annual step-up, your SIP will increase to Rs 11,000 in the second year.
What is a realistic expected return rate for SIP?
Historical data shows that equity mutual funds in Pakistan have delivered returns between 15-18% annually over long periods (15+ years). However, returns can vary based on market conditions, fund selection, and investment duration. It's advisable to use conservative estimates (14-16%) for financial planning and consider higher returns as a bonus.
How long should I invest in a SIP?
SIPs work best with a long-term investment horizon of at least 5-10 years. The longer you stay invested, the better you can benefit from the power of compounding and ride out market volatility. For wealth creation goals like retirement or children's education, consider investing for 15-20 years or more.
Can I stop or pause my SIP anytime?
Yes, SIPs are flexible. You can stop, pause, or modify your SIP amount at any time without any penalties. However, it's recommended to continue your SIP even during market downturns as this is when you accumulate more units at lower prices, which can significantly boost long-term returns.