An investment calculator is a tool that allows you to calculate the returns and the investment amount based on the details you enter. Furthermore, these details are variables and you can modify them according to your requirements.
In this article, we will discuss the 5 variables that are used in investment calculators.
An investment plan is important for achieving financial goals. It can help in building a significant corpus. Furthermore, there are tools that you can use to create a good financial plan. An investment calculator is one such tool that you should use before making any investments.
What is an Investment Calculator?
With the help of an investment calculator, you can calculate the amount of returns you can earn by investing. Therefore, using this tool is necessary before starting any investments. You can also find out the amount of money you need to invest in order to achieve your financial goals.
Benefits of Using an Investment Calculator
- It is Easy to Use
Using an investment calculator is very easy. You need to add a few details to get the result.
- It Can Help Make a Good Decision
An investment calculator can provide you with the approximate amount of returns you can earn by investing in a plan. Therefore, it can help you choose the right investment plan that can help you meet your investment goals.
- It Can Help Compare Different Plans
There are various investment plans. The returns you can earn will differ based on the investment you choose. You can check the results of various plans using a calculator. Thus, an investment calculator can help you compare different plans and choose the one that can provide you with higher returns.
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The Variables You Should Know About While Using an Investment Calculator
In order to use an investment calculator, you need to enter a few details. These details are variable factors. Once these variables are entered, the calculator will provide you with the result. Furthermore, you can modify these variables according to your requirements to get the desired result.
Here are 5 variables you should know about-
- Principal Amount
The principal amount is the amount of money you want to invest. You can choose a SIP amount or a lump sum amount in order to use the calculator.
- Rate of Return
The rate of return defines how much money you can gain based on the investment. It differs based on the investment instruments. In order to find out how much money you can earn, you need to enter the expected rate of return.
- Investment Tenure
Investment tenure is the duration for which you want to stay invested in a plan. You can choose a tenure based on when you want to achieve your goals.
- Desired Amount
The desired amount is the amount of money you want to earn based on your investment.
- Additional Contribution
This is the additional amount of money you plan on investing, along with your principal amount. It might lead to higher returns at the end of the tenure.