Do you know how much you will save on your investment plans? Irrespective of whether you are investing for long-term wealth, retirement, or buying something significant, you must know your returns on the investments you make. It is very simple to determine your returns with the help of an online calculator, entering basic information, such as investment amount, duration, etc.
Let’s understand how to use this calculator and why it can be an asset in planning your financial future.
Understanding the Investment Online Calculator
An investment calculator is a tool or software that can assist you in estimating the potential growth of your money. You can determine the possible returns on that specific investment by entering details like the initial investment amount, term, and interest rate. Using this calculator is an excellent way to plan your financial future and decide where to invest.
Benefits of Investment/Financial Calculator
An online calculator to determine your investment returns can simplify complex financial formulas and make it easy for you to understand how to manage your money. This can assist you in making informed buying decisions on available tax saving investment plans in India. Besides, there are some more benefits, which are listed below:
Goal Setting and Planning
Whether building wealth over time or preparing for retirement, these calculators can help you define your financial goals. Just by entering information, such as the expected return amount and desired investment amount, you can find out the outcome of your investment.
Risk Assessment
You can assess different investment options, potential risks, and returns using these calculators. This means that by using the tool, you can make the right decision by comparing different tax-saving investment plans in India based on projected growth rates and historical data.
Knowing Key Metrics
Calculators can also help you understand and calculate essential information, such as IRR or compound interest. Knowing these metrics will help you evaluate your investment’s benefits and costs.
Developing Investment Discipline
You can use these calculators to design a personalised investment plan and track its progress. Doing so will help you stay focused and disciplined with your contributions and remain motivated towards your financial goals and future.
How to Use the Calculator to Determine Investment Returns?
Before understanding how the calculator works, it is essential to remember that there can be many online calculators, and each may work differently. The working mechanism may also differ based on the investment product. However, using the calculator to calculate the investment returns is easy.
Listed below are the steps:
Step 1 – Enter your current age
Step 2 – Determine your desired investment amount
Step 3 – Select the investment duration
Step 4 – Decide the annual rate of return you want to get
Step 5 – Fill in your personal information, like name, phone number, and email ID
Step 6 – Press submit to get information on your estimated returns
Things to Consider Before Investing
Everyone loves to make money quickly, but that can come with risks. Therefore, before investing, here are a few to consider so that you do not end up losing your hard-earned money:
- Target – Always include inflation when setting up a return target for yourself. Besides, do not forget to factor in lifestyle changes. With an increase in income, your lifestyle expenses will also increase, and it is often difficult to make lifestyle changes once you are used to it. Hence, try to be as reasonable as possible.
- Rate of returns – Risks and returns are interrelated. Depending on whether you are a conservative investor or an aggressive investor, you can determine your return expectation. However, always remember to enter a reasonable rate of return in the calculator. If you enter a high percentage, you may save less and fall short of your investment goals.
- Investment time – Remember, investment planning should happen as soon as possible. There is no right or wrong time to invest in mutual funds, equities, or other instruments. If you delay your investment, you may not reach your desired goal with the monthly savings. The earlier you start investing, the longer your investment duration will be, and you will receive a higher compounding benefit.
Conclusion
An investment calculator is an excellent and powerful tool that can effortlessly guide you toward financial growth. These calculators will help you recognise your investment return potential and growth based on factors like contribution frequency, initial investment, and risk. Whether you invest in fixed-income or mutual funds, these calculators can help you gain valuable insights into your returns.
However, remember that even though these are helpful tools, they are not infallible. Since they rely on historical data, they can only give you an estimated idea of your returns and do not guarantee that they will be final. Therefore, do your market research, check real-time insights, and invest in plans that may offer you the best returns.
