Having the right tool is important in the investment journey, and an investment calculator is a valuable asset. It facilitates easy projections of returns, risk assessments, and the customisation of your investment strategy to match your goals.
Table of Content:
What is an Investment Calculator?
Various investment options are available in the market with varying interest rates and tenures. It is often confusing for investors to make the right choice and select the most beneficial option. Luckily, online tools like the investment calculator have emerged, which can guide the decision-making process.
An investment calculator is a user-friendly tool that helps you determine the value of your invested money after considering variables like the investment tenure, expected rate of return, frequency, etc. With this calculator, you can effortlessly compare different instruments such as the Public Provident Fund, National Pension System, and mutual funds, aiding you in selecting options aligned with your financial goals.
This calculator thus transforms the investment process into a stress-free and informed journey by performing complex financial calculations in seconds.
How Does an Investment Returns Calculator Help You?
The investment calculator in India offers valuable insights and streamlines the investment process by helping with the following:
- Estimation on Investment Amount:
Are you confused about the amount you must invest to achieve your financial goal?
The investment growth calculator can guide you and provide you with the answer. All you need to do is enter the other variables, such as your target returns, the expected return rate, desired tenure, and frequency. The calculator will then estimate the amount you should start with for the savings goal you want to achieve.
For instance, to receive the target amount of ₹100 at a compound interest rate of 4% after 2 years, the calculator will guide you to invest ₹92.46 at the beginning.
- Estimation of the Future Value of Your Invested Savings: Similarly, if you have already decided what amount you will invest in an instrument, you can use the calculator to estimate how much you will receive after your investment tenure is over. You can then plan your future expenses accordingly.
For instance, if you enter that you will invest ₹100 at the beginning and ₹10 at the end of each month for 2 years with a 4% annual compound interest rate, the calculator will show that you will receive ₹357.42 at the end.
- Estimation of Actual Return on the Investment: If you know the maturity value for a specific investment amount, the calculator aids in estimating the actual return. This feature is particularly beneficial when comparing different investment plans, empowering you to make well-informed choices for optimal financial outcomes.
For instance, if you received ₹500 after investing ₹100 at the beginning and ₹10 at the end of each month for 2 years, you can enter these values in the appropriate fields. The calculator will then show you that you actually earned ₹160 as the total return.
- Assess the Progress of Your Investment Plan: The calculator isn't just for initial planning; it's a dynamic tool for tracking and assessing your investment progress. You can adjust your investment strategy by comparing your progress with expectations. The calculator accommodates annual and monthly investment plans, allowing you to stay on course with your financial objectives.
The above calculation and illustration of figures are indicative only and not on actual basis.
Benefits of Using Investment Calculators
The investment return calculator offers efficiency and precision that can guide you toward strategic financial planning. It paves the way for a more rewarding investment journey with the following benefits:
- Save Time
- Compare Investment Options
- Estimate Ideal Investment Amount
- Calculate the Return on your Investment
The investment return calculator operates as an efficient and automated tool, swiftly handling the mathematical complexities of financial calculations. With results generated in a fraction of a second, it provides accuracy and saves you valuable time and effort.
Different investments offer different rates of return over the investment periods. You can compare the future values from each investment and find the most suitable depending on your needs. If you're already invested in a financial instrument, the calculator also enables you to compare these returns with other options. It aids in estimating whether your current investment returns fare better or worse than those of similar alternatives.
Particularly useful for those aiming to invest in a specific goal regularly, the investment growth calculator assists in estimating the optimal amount. It provides various options to convert your savings into strategic investments automatically. An excellent return calculator also lets you customise variables like return rates or investment tenure. This adaptability provides a tailored approach to financial planning, accommodating diverse goals and risk preferences.
An investment calculator can help you accurately guess the rate of return on an investment. All you need is the investment amount and the final value of the instrument.
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Investment calculators integrate real-time market data, ensuring users make decisions based on the latest financial trends. Including interactive visuals and scenario modelling adds an extra layer of user-friendliness. This makes it a versatile tool, offering a comprehensive view of potential outcomes while adapting to your changing financial needs.
Return calculators exist to simplify the investment journey. Thus, the process of using them is also fairly easy.
All you need to do is follow the steps mentioned below:
- Input the amount you are investing, considering your financial goal and risk tolerance.
- Enter the expected rate of return, which is the interest or growth you anticipate.
- Specify the investment period or duration you have in mind.
- The return on investment calculator will then compute the future value of your investment. You can also explore different scenarios by adjusting these variables to see how they impact your results.
How to Save and Invest Wisely?
Saving and investing wisely are essential for building wealth over time and meeting financial goals throughout life. A good investment strategy involves ensuring that you have enough funds available when needed, both for known and unforeseen objectives. This includes maintaining a sufficient contingency fund, addressing short-term goals, achieving long-term financial goals, and ultimately attaining financial independence.
You can estimate your specific savings needs by using a calculator. To start quickly, you can follow these suggested ratios:
- Allocate 15% of your income to your "Retirement Goal."
- Dedicate 5% for contingency planning, covering term life insurance, health insurance, and an emergency fund equivalent to 6-9 months of your income.
- Allocate 20% for long-term goals, such as your child's education, marriage, or purchasing a home.
- Allocate 10% for short- and medium-term goals, such as buying a car, home renovation, family vacations, and essential household items.
By saving 50% of your income following these ratios, you can effectively address most of your financial goals and aspirations. To invest wisely, consider the following table that lists various investment options that will be suitable for each goal:
| % of income | Allocation | Investment Options |
|---|---|---|
15%
| Retirement Goal
| EPF (Employee Provident Fund), PPF (Public Provident Fund), NPS (New Pension System), ULIP, Guaranteed Savings and income plans |
5% | Contingency Preparation (after you have built the emergency fund pool)
| Term Life Insurance (critical illness and accidental covers part of it), Family Mediclaim, Super Saver Deposits, Bank and Post Office FDs, Debt Mutual Funds |
20%
| Long Term Goals
| ULIP, New Pension Scheme, Equity and Balanced Mutual Funds, Guaranteed Savings Plans, PPF, Child Plans |
10% | Short and Medium-Term Goals | Debt Mutual Funds, Bank FDs, RDs, ULIP with partial withdrawal option, NSC, etc. |
Frequently Asked Questions
The worth of money in the future depends on where it lies today. For example, if you keep ₹10,000 in your pocket or piggy bank, it's worth 20 years later, which will be the same as ₹4,563 today (assuming an inflation rate of 4% p.a.). However, if it is invested in an investment that earns 8% p.a. interest, the same amount will be ₹46,600, worth ₹21,272 in today's terms. You can use the return on investment calculator to estimate the answers quickly on your terms.
Ten years is a good period to utilise some of the long-term investments to grow your money. If your risk appetite allows, you can also take a little more risk with exposure to equity funds. The best option, in this case, would be to use ULIPs for balanced portfolio investments. ULIPs like Invest 4G from Canara HSBC Life Insurance allow you to manage your equity exposure passively to avoid market pitfalls, too. Plus, the investments and maturity proceeds are tax-free.
You can use an online investment or savings calculator to quickly estimate a lump sum investment amount. You will need to use the targeted future value, rate of return on invested money and investment horizon for this calculation.
If your aim is to turn your ₹100,000 into ₹200,000, and you are open to the investment horizon, you can invest the money in equity funds. The best way to allocate this amount in an equity fund is through SIP over a few months. But, if you have a maximum time limit for your goal, say 10 years, then guaranteed investments would be a better idea. For example, a guaranteed savings plan or debt funds would give you the certainty of doubling your invested money.
A millionaire in terms of Indian currency would mean that you at least have ₹10 Lakhs in cash or equivalent investments. It will take, say, as little as ₹5000 a month for you to build a corpus of ₹10 Lakhs in a few years. Without earning any interest, such an investment will take about 17 years. If you invest this amount aggressively, you may build the corpus in just about 10 years or less. Use the return on investment calculator to determine the saving horizon you need to build such a corpus.
You need to build a large pool of funds to be able to draw a significant amount of income out of it. Thus, in the beginning, you need to focus only on two things:
● Maximise savings
● Invest these savings aggressively for growth.
Depending on what portion (90% to 10%) of your income you invest regularly, you can replace your present income within 15 to 30 years.
If you plan to invest to meet your future goals, you can look for Canara HSBC Life Insurance savings and investment plans like iSelect Guaranteed Future Plus or Guaranteed Saving Plans.
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