Investment Calculators

Investment Calculator Variable:

For any investment that a person makes, there are four variables that play an important role in growing up the investment, these investment calculator variables are:

Initial Amount: This amount is also known as the principal amount in investment calculators, and is placed at the time of the start of the investment. In general, the starting or initial amount of investment should be a large amount that one has saved for his/her long or short term goal.

Rate of Return: The rate of return is that variable of the investment calculator that appears as a percentage and is used to compare the effectiveness of different types of investment options. This investment calculator variable matters the most to the investors.

Length of Investment: The length of the investment or period for the investment in months or years is another factor that plays a major role in the investment calculator. The longer investment means more risks to it because of the unforeseen future, but more periods of investment increases the compounding of the returns and hence greater rewards are generated.

Final Amount: The desired or required amount that an investor wants at the end of the investment lifecycle is known as the final amount or end amount.

Additional Contribution: This is also known as annuity payment in financial terms that may be paid as an extra surplus amount. An investment can be done without this feature.

What does Investment mean?

A very famous definition of Investment is: “The money you earn is partly spent and the rest is invested for meeting future goals. This is called the investment”.

Money is one of the biggest necessities of everybody’s life. Today, more than ever before, with rising aspirations, numerous opportunities to spend, and longer life spans, merely earning a good income is not enough; it is equally important to invest our savings wisely to ensure that it generates a good return in the future.

But selecting an appropriate investment option can sometimes be cumbersome and that’s exactly why it always necessary to know as much as you can about investment options.

Most of us end up making financial decisions simply based on a bank or insurer’s salesperson or friend’s recommendation. But it simply does not make any sense. You should do some home-work for wise investment as you are investing your precious savings.

Types of Investment:

There are different types of investment options that can be used to gain a healthy return over some period. Different investment options use different investment calculator to calculate the investment gain:

Fixed Deposit (FD) in Bank or Post Office: A fixed deposit (FD) in the bank or post office is the most common investment type that is popular among people with low-risk appetites.

Fixed Maturity Plans: These close-ended debt funds are offered by the mutual funds. As the name of these funds says, they have a fixed maturity date.

Debt Mutual Funds: These open-ended mutual funds are considered less volatile if we compare them with equity. Moreover, these mutual funds offer stable returns as well.

Equity Oriented Mutual Fund Scheme: As per the name of this investment option, these are the schemes that invest at least 65% of the corpus of the stock in domestic organizations.

Stocks or Direct Equity: This is one of the popular types of investment. Here an investor gets a percentage or share of ownership of an organization and the company then promises to share its profits with its investors. It is not fixed-interest investments, but they are considered as one of the most important forms of investment.

Bonds: In this type of investment, an investor gives some amount as a loan to the bond issuer when the investor acquires the bond. The bond issuer repays the money over a period of time with a fixed interest rate.

Public Provident Fund or PPF: PPF or Public Provident Fund is a Government of India-backed long term small savings scheme which offers tax benefits to investors under Section 80C of the Income Tax Act 1961. The interest that one earns from this and the maturity gained get tax exemption.

National Pension Scheme (NPS): The investors who want to safeguard their post-retirement life can invest in a pension plan named as National Pension Scheme. One can register for NPS here.

Commodities: The valuable metals such as silver and gold or day to day use items such as gas and oil, all are commodities. If one has invested his money in commodities, he can use gold in the situation of various financial insecurities.

Real Estate: Real estate investment is another good way to invest money. People can purchase a house to self-occupy or to get rental income from it or get capital gains.

Some Basic FAQs on Investment:

What is the difference between saving and investment?

Savings:

Savings are generally funds that you set aside to meet your near future needs or short term needs. Like taking your family for a small holiday or buying an electronic item etc. The most important feature of savings is that these can be accessed relatively quickly. The most universal way of saving is to place money into a bank account (‘savings’ account) where the money is available to you on demand. It is for short term needs.

Investments:

Investments, on the other hand, is what helps you to meet your long term needs and larger financial goals. There is some level of risk attached to most of the types of investments and this is what determines the returns on your investments. The higher the risk, the greater the chances of a higher return.

Why should one invest?

We need to invest to:
i. Earn a return on our idle resources.
ii. Generate a specified sum of money for a specific goal either long-term or short-term in life.
iii. Make a provision for an uncertain future.
iv. To beat inflation.

When to start investing?

The earlier you start investing the better. By investing early you give your investments more time to grow. Here the concept of compounding increases your income, by accumulating your principal and the interest or dividend earned on it, year after year.

Three golden rules for all investors are:
i. Invest early
ii. Invest regularly
iii. Invest for long term& be patient

How to invest?

You work hard to earn money and, therefore, it is very important to invest it wisely. Ask yourself some these type of questions before deciding on how to invest:

1. What are your needs and financial goals? Do you think about a regular income or want to buy a house or require funds for your child’s education?
2. What is your risk-taking capability? Can you face the volatilities in the capital market or are you satisfied with a low-risk, low-return investment?
3. How soon do you need the money? Can you invest for a longer time period for a higher return or do you need money in the near future?
4. What are your cash flow requirements? Do you need a regular income or a lump sum amount after a certain period of time?

What are the types of investment?

1. Fixed Deposit
2. Recurring Deposit
3. Post Office Saving Schemes
4. PPF
5. Bonds (NSC/ KVP)
6. Real Estate
7. Precious Metal
8. Mutual Fund
9. Equity

How Investment Calculator Works?

Anyone can easily calculate his investment returns through different online investment calculators available on this page with high accuracy. Most of the investment calculators have two options for period entry:

• Yearly investment calculation
• Monthly investment calculation

Following are the steps to calculate the investment returns through any investment calculator:

• Step 1: Enter the principal amount that he wants to invest every year.
• Step 2: After this, fill in the rate of return that he wants to get. It depends on the customer, some need higher return with risk, but some need lesser return with no or very little risk.
• Step 3: The next step that one has to follow is to select the period in years or months depending on the investment calculator requirement for which he wants to stay invested.
• Step 4: After submitting the all variables required by the investment calculator, one will get the final result for the investment query.