SIP Calculator

What is a SIP?

A Systematic Investment Plan (SIP) is a method of investing a fixed amount at regular intervals — typically monthly. Instead of investing a large sum at once, SIPs allow you to invest smaller amounts consistently, which helps average out market volatility over time. This approach is ideal for building long-term wealth in the Pakistan Stock Exchange (PSX).

How the SIP calculator works

Because each monthly instalment is invested at the start of the month and then compounds for the rest of the term, the projection uses the future value of an annuity-due:

• FV — the projected value at the end of the term
• P — the amount you invest every month
• i — your expected annual return divided by 12
• n — the number of monthly instalments

Worked example. Investing PKR 10,000 a month for 10 years at an expected 15% a year gives i = 0.0125 and n = 120. The formula returns roughly PKR 27.9 lakh against PKR 12 lakh contributed — about PKR 15.9 lakh of that total comes from compounding rather than from your own deposits. Stretch the same instalment to 20 years and the projection rises to roughly PKR 1.5 crore, because the later years compound on a far larger base. That widening gap is the whole argument for starting early.

Benefits of SIP Investing

• Rupee Cost Averaging: Buy more units when prices are low and fewer when prices are high, reducing average cost per unit.
• Power of Compounding: Your returns generate further returns, leading to exponential growth over time.
• Disciplined Investing: SIPs instill a regular saving habit, making it easier to build wealth consistently.
• Low Entry Barrier: Start investing with as little as PKR 1,000 per month.

What return rate should you assume?

Over long periods the KSE-100 has delivered roughly 12–18% a year, so a 12–15% assumption is a reasonable middle for a diversified PSX portfolio. Model a pessimistic case too — run the same instalment at 8% and see whether the plan still works. PSX is a volatile market: individual years have swung well into double-digit losses, and a SIP does not protect you from that. What it does is spread your entry price across many months, so a bad year buys more shares rather than wiping out a single badly-timed lump sum.