It is essential to have a sizeable corpus to meet the financial requirements of life – it doesn’t matter if you are a young, financially independent person or the breadwinner of the family. You cannot live paycheque to paycheque to ensure a financially secure life in the future. You should have sizeable savings – which can be accumulated faster with investment.
Unsurprisingly, investment has become a pillar of a financially secure life. It helps you grow your wealth, which ultimately supports you in fulfilling your financial goals faster. But how do you set these financial and investment goals? How would you know if a particular investment amount is adequate to reach the goal?
This is where an investment calculator comes in. An investment calculator is a go-to financial tool for investors to make informed investment decisions. Let us understand how.
What is an Investment Calculator, and How Does It Help You Make Informed Investment Decisions?
An investment calculator is an online tool that can help you estimate your returns and decide if a particular investment plan offers you a prosperous avenue. You can gauge the investment prospects of multiple investment plans to determine which one aligns with your investment goals.
The tool is remarkably simple to use and offers results quickly. All you are required to do is enter basic information such as investment amount, investment tenure and the return rate to compute results.
Here are the elements that you can decide with the help of an investment calculator:
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Short-Term or Long-Term Investment:
Before you decide on the other essential investment-related information, it is vital that you decide if you should invest for a shorter duration or longer. You have to decide that on the basis of your investment preferences and goals.
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Investment Amount:
The investment amount is one of the most crucial aspects of investment and financial planning. Your returns majorly depend on your investment amount. Ergo, it requires your utmost consideration and research. Once again, the investment amount will depend on your financial goals.
You can use an investment calculator to decide this investment amount. To get started, consider putting a random investment amount that you think would be right, enter the return rate you are expecting, and hit calculate. Once the return figure is on the screen, see if it aligns with your financial goals.
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Investment Tenure:
Investment tenure is another significant factor that investors need to consider. It will firmly depend on if you are planning to make a short-term investment or a long-term investment. If you are hoping to get high returns, staying invested in the investment plan for a longer duration is suggested. You can use an investment calculator to make easy investment tenure decisions.
You can also weigh other factors, such as your retirement age or financial goal, before deciding on the investment tenure.
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It Will Help you Decide on the Right Investment Plan:
An investment calculator also helps you choose the right investment plan according to the details you enter. These details can include investment amount, investment tenure and risk appetite. Based on these details, these investment calculators suggest the investment plans introduced by leading financial institutions. You choose the one which suits your financial requirements the best.
Factors to Consider Before Using an Investment Calculator
Apart from these elements, there are several others factors you need to consider – not only before you use the investment calculator but when you are deciding on the right investment plan for you. Here are some of them:
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Risk Appetite:
Investment can be a risky game if you do not play right. A financial crunch is the last thing you need when you are investing. Ergo, only invest the amount you can afford to. There is no need to go overboard with the investment amount to earn high returns. You can use an investment calculator to calculate your estimated returns and decide the investment amount accordingly.
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Investment Plan’s Flexibility:
An investment plan should offer you flexibility when it comes to withdrawal and customization. As most investment plans come with a lock-in period, a longer one might cause you inconvenience in your time of need. However therefore, it is suggested that you choose an investment plan that comes with a shorter lock-in period but provides you customization to adjust the investment tenure according to your preference.
One such investment plan is PPF, which, even though it comes with a tenure of 15 years, allows you to make premature withdrawals starting from the 5th year. It might be a promising idea to use a specially designed PPF interest calculator to estimate your PPF returns. The PPF interest calculator provides returns according to the fixed interest rate applicable to the scheme.
The Bottom Line
An investment can be a handy tool when you are planning your investment. You can use this free investment calculator tool to create an investment portfolio which aligns with your investment objectives and preferences.
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