Things you should know about investment calculators

Things you should know about investment calculators

Investments made today will financially secure your future. There are numerous technical jargons and computations to be understood in order to find the best return options for your investment. This process has been simplified with the introduction of investment calculator software online. These calculators give an accurate estimate of what type of investment will yield the best return.

Interesting facts about investing

  • Age makes a big difference when it comes to making an investment, which is why the earlier you plan to start, the better will be your yield on the total investment. If you were born after 1960, the ideal age to retire would be 67 to reap full benefits on any investment you plan to make over the years
  • Savings for retirement will include everything from your 401Ks to other financial retirement instruments, apart from the money you had earmarked for retirement
  • Monthly contribution for the investments you plan to should be at least 15% of your paycheck. This is the money you set aside for retirement
  • Popular types of investment options include Cash Deposits, Bonds, Stocks, Real Estate, and commodities. You can find useful investment calculator software for different types, to help accurately estimate the return on investment
  • Standards and Poor index is an effective benchmark and reference index, which is also one of the most commonly followed equity indices with a market capitalization of $23 trillion.

Things to keep in mind while calculating investments to be made

Long-term goal
Investment calculators allow you to assess your long-term goals and help decide the total value of investment required. This will also help you track your financials and understand the financial commitment that has to be made.

Investment period
Once you finalize the amount you plan to invest and the contribution that has to be met on a periodical basis, it is imperative to set a reasonable time frame for the return on investment. Factors such as service left, the age of retirement, other fixed financial commitments all have to be considered while deciding the duration for which you plan to invest. This can range from 5 to 30 years for optimal returns. Investment calculators factor in the data to calculate possible returns.

Rate of return
Rate of return is the interest rate at which you plan to make investments to earn return on the principal amount. This interest rate can be simple interest or in many cases compound interest, which will earn you gains on the interest as well as previously accumulated interest to be added to the current return. The compounding will allow for better profits due to the additional interest.

Contribution frequency
Contribution frequency refers to the number of times a contribution is made to any particular investment, during its tenure. Popular options offered by investment calculators available online include weekly, alternate weekly, per month, quarter or even annually.

Compounding frequency
Return on your investment will depend on two important factors, the rate of interest and frequency of compounding. Popular options offered by investment calculators include daily, monthly, quarterly, semi-annual, and annual compounding.

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