Expenses are rising faster than our incomes. All the more reason that we cannot depend on monthly paychecks alone to manage our present and future expenses. We need to generate extra income, and this is where investment comes in handy. One can invest a little portion in investment schemes and get substantial returns.
However, calculating returns is a tricky affair. Fortunately, investment calculators can come as a knight-in-shining-armor for us when it comes to calculating returns on investment.
Why Should You Calculate Investment Returns?
For successful financial planning, you need to know what you have and what you can get. Knowing your approximate returns can help you make better financial decisions in the future.
How to Use an Investment Calculator?
- Choose the Appropriate Type of Investment Calculator
The first step is to know where you are investing. Even though there are numerous different investment calculators on the internet, the one you should use must depend on the investment types you are planning to choose. For instance, Unit Linked Insurance Policies (ULIP) and Systematic Investment Plan (SIP) will yield you different returns. But if you use a general investment calculator, you might not get the correct approximate figure.
- Fill in the Details
In order to use an investment calculator, you have to fill in your basic details, such as:
- Age
- Amount You are Planning to Invest
- Investment Gap (Monthly/Annually)
- Time Period (In terms of Years)
- Choose the Plan
Some investment calculators, such as Max Life Insurance, can give you an approximate figure of return based on the investment plans you consider.
These investment plans depend on the company you choose.
- Hit Calculate
When you have mentioned all the details and chosen a plan, the investment calculators would automatically calculate the amount for you. The result will include:
- Total Investment Made
- Approximate Returns on Maturity
Disclaimer: No expenses or investment calculator on the internet can give you an accurate figure. As markets are subject to risk, the number can change. However, the approximate number calculated by the investment calculator would be all you need to make reliable financial decisions.
If your goal is to save and calculate the rate at which your savings can grow over a period of time, you can also use savings calculators online to aid your financial decisions.
How Do Investment Calculators Work?
Investment calculators calculate Returns on Investment (ROI) using the methods of compound interest. They also take into account inflation to give you an approximate figure.
Benefits of Using an Investment Calculator
- An Investment Calculator Can Aid Your Financial Planning by Giving You an Approximate Figure.
Given that it can tell you how much wealth you can accumulate, you can make better investment decisions for yourself.
For instance, if the investment calculator gives you a future figure that you think won’t be adequate to meet your future expenses, you would know if you should try to expand your savings. You can also use an investment calculator online to discern the rate at which your savings can grow over a period of time.
- An Investment Calculator Can Tell You How Much to Invest
If you don’t know how much to invest, an investment calculator can give help you out by giving the appropriate amount of return. If you think the return is inadequate, you can increase your investment to increase returns.
- An Investment Calculator Can Tell You Where to Invest
Given that there are so many investment plans out there, it can get challenging to figure out the right scheme for yourself. But an investment calculator can be of help by predicting returns that each investment can give. The best investment plan would be the one that matches your risk appetite. Additionally, it should also be the kind you can afford, and the one that can yield you higher returns.
- Helps you Create Reserves Efficiently
One doesn’t only need to prepare themselves for basic future expenditures such as cost of living, rent, health insurance, etc. One has to prepare for numerous heavy expenditures such as education fees, marriage costs, medical emergencies, and retirement. Creating reserves for each of these heavy categorical expenses can be highly beneficial for a financially sound future. Investment calculators can help create reserves better by calculating the amount at maturity.
For instance, if you have to financially prepare yourself for your children’s wedding by creating a wedding reserve, you can know how much money you can accumulate at the end of a period using an investment or savings calculator.
The Last Word
With the help of an investment calculator, you can determine both the amount to invest, and where to invest. You can choose from a myriad of investment plans like SIPs, Mutual Funds, Security market, or savings and investment plans formulated by banks, financial institutions, and insurance agencies. Max Life Insurance, for instance, has a Guaranteed Income Plan, also known as, Max Life Smart Wealth Plan. The plan offers guaranteed maturity benefits such as maturity sum assured + Accrued Guaranteed Additions. Other than that, one can also get tax benefits and death benefits on choosing such plans.