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How to use investment calculators

Investment means putting money into a business or other investment vehicles such the stock market, money market, property market, savings account and retirement annuity, which is secure for a period of time in order to generate more income. Investment vehicles which maximise gains and generate more income are easily determined and compared through the use of investment calculators.

How to calculate

How to use the investment calculator It is important to know how to use the investment calculator and the information required in order to obtain accurate results. The information required for the calculations depend on the type of investment chosen like money market investment requires information such as lump sum investment, the counter to be picked like the Over The Counter (OTC), interest rate, duration and the charges involved on maturity. By using this information, the extra money to be generated will be revealed.

Information to be generated by the calculations

The calculations generate information related to each investment vehicle chosen which include the type of investment such as long-term or short-term investment, principal amount invested, the interest rate and interest to be earned per month or per year, investment duration, the impact of tax, the costs involved on investment and the investment returns on maturity or after a targeted period of time. It also shows the penalties charged if a fixed-term investment like a fixed bank account is to be redeemed before the maturity date.

Why use the investment calculators?

Advantages of the investment calculators The finance calculators help to decide on investment planning and portfolio management. It shows the returns to be earned on each investment portfolio, hence the information is useful when deciding on which investment counters to pick and for diversification. Financial calculators Financial calculators help to determine which market to invest in, like on the stock market, money market or property investment. The information shows investment portfolios that are performing better than others where returns on capital investment can be maximised. Also, it is used to determine which investment counters are performing badly and which one of these may result in losses in the long-run. The investment calculator The investment calculator generates information which is necessary for budgeting purposes like showing a fixed principal amount which can be channelled towards the investment account on monthly basis or as a once-off payment as well as the final future value of the investment. The calculator is used in setting up investment strategies and goals.

Disadvantages

It is used for guiding purposes only and the information cannot be fully relied on as the interest rates and economy change with time.

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