What is SIP - Systematic Investment Plan
Systematic Investment Plan (SIP) is one of the most popular ways to invest in mutual funds. Whether you're a seasoned investor or a beginner, an SIP calculator helps you plan your financial journey by estimating your future returns.
Quant SIP Calculator
The Quant SIP Calculator is an online tool offered by Quant Mutual Fund to assist investors in
calculating the future value of their Systematic Investment Plan (SIP) investments.
Quant Mutual Fund is known for its innovative approach to mutual fund management and aims to
simplify investment decisions for its users with tools like the SIP calculator.
The SIP method allows investors to contribute a fixed amount regularly, making it an excellent
strategy for long-term wealth creation.
The Quant SIP Calculator helps you estimate the future value of your investment by inputting your
monthly contribution, expected rate of return, and investment period.
Formula Used in Quant SIP Calculator
The formula to calculate the future value of an Quant SIP investment is:
The formula for SIP is: \( FV = P \times \left[ \frac{(1 + \frac{r}{n})^{nt} - 1}{\frac{r}{n}} \right] \times (1 + \frac{r}{n}) \)
Where:\( FV\) = Future Value
\( P\) = Monthly SIP investment
\( r\) = Annual rate of return in decimals (as a decimal, e.g., 12% = 0.12)
\( n\) = Number of compounding periods per year (Usually 12 for monthly SIPs)
\( t\) = Investment tenure in years
Example of Quant SIP Calculation
Let's understand how to calculate Quant SIP returns using an example:
- \(P = 5,000\) (monthly investment)
- \(r = 12\%\) annual interest rate (\(0.12\) as a decimal)
- \(n = 12\) (monthly compounding periods per year)
- \(t = 10\) years
Now, let's substituting these values into the formula:
\( FV = 5000 \times \left[ \frac{(1 + \frac{0.12}{12})^{12 \times 10} - 1}{\frac{0.12}{12}} \right] \times (1 + \frac{0.12}{12}) \)
Step-by-step calculation:
- Monthly interest rate: \( \frac{r}{n} = \frac{0.12}{12} = 0.01 \) (or 1%)
- Total compounding periods: \( nt = 12 \times 10 = 120 \)
- \( (1 + 0.01)^{120} = (1.01)^{120} \approx 3.30039 \)
- \( \frac{(3.30039 - 1)}{0.01} = \frac{2.30039}{0.01} = 230.039 \)
- \( FV = 5000 \times 230.039 \times 1.01 = 5000 \times 232.339 = 1,161,695 \)
Therefore, the future value (FV) of your SIP investment is approximately:
\( FV \approx \text{₹}1,161,695 \)
How to Use an Quant SIP Calculator?
Using an online SIP calculator is straightforward:
- Enter Monthly SIP Amount: Enter the fixed amount you plan to invest monthly.
- Provide Expected Annual Return Rate: Enter the estimated return percentage (e.g., 12%).
- Enter Investment Tenure: Specify the number of years you plan to invest.
- View Results: The calculator will instantly display the Total Investment, Wealth Gained, and Future Value.
Why Use an Quant SIP Calculator for Mutual Fund Investments?
SIP investments rely on the power of compounding and rupee cost averaging, making them ideal for long-term wealth creation. An SIP calculator helps you understand the impact of these benefits by giving you accurate projections.
