Investment Calculator

Introduction

The investment calculator can be used to calculate the value of the investment at a future date at the given rate of return and including any additional contributions you make during the course of the investment.

An investment is an asset that appreciates over time and generates a return for the investor for the money by them. Investing is about distributing money and resources into some activity, business, or project with the expectation of making more money than what you invested. The difference between what you invest and what you earn out of the investment is the profit.

Are you looking to calculate how much to invest monthly to achieve a target amount, or at what rates do you need to invest? Use our Investment calculator to find out!

How to use the Investment Calculator?

Using the investment calculator, you can calculate the required rate of return, the time period, the additional monthly payments, and the final investment value.

The variables in the calculator include

Initial Amount The amount invested into the business or while buying the asset

Rate of Return The rate of return that one can expect on the investment over the time period of investment

Time Period The time period of investment

Frequency of Compounding The compounding rate could be Annual, Semi-Annual, Weekly, or Daily, depending on the investment.

Additional Contribution The additional amount paid during the course of the investment

Contribution Frequency The frequency of additional contribution

Contribution Due at The payment due at beginning or at the end of period

Final Value The value of the investment after the time period at the given rates of return.

What is an Investment?

An investment is an asset that one can purchase, expecting to make a profit or generate an income. The value of the investment may increase over time. Investors invest in many assets like stocks, bonds, commodities, ETFs or mutual funds, real estate, and many more.

People invest for a variety of reasons. The objective is to make money, but the reasons for it may differ; most people invest for their retirement, and some invest to afford a large purchase or expenditure like buying a house or paying for their higher education. Some people invest to create additional income streams or to increase their wealth.

There will be different criteria that investors use to evaluate an investment. Some criteria are risk, rate of return, the initial investment required, time period, alignment with personal goals and objectives, etc.

How is the value of the Investment Calculated?

Investment Value using Compound Interest

If the investment earns a compound interest, the Investment value at a future date is calculated using the formula shown below. The formula below is also known as the future value formula

Where,

PV → Investment Current Value also known as Present Value

It is the amount that is initially invested or the current value of the asset.

r → Growth rate in % Per Annum

This is the rate of growth of the investment or asset.

n → Time Period in Years

This is the duration after which we want to find the future value of the investment.

Investment Value using Compound Interest Non-Annual Compounding

If the investment earns a compound interest, then the future value of the investment is calculated using the formula shown below.

Where,

PV → Investment Current Value, also known as Present Value

It is the initial investment amount or the current value of the asset.

r → Growth rate in % Per Annum

This is the rate of growth of the investment or asset.

n → Time Period in Years

This is the duration after which we want to find the future value.

k → Compounding Periods per year

This could be yearly, half-yearly, quarterly, monthly, weekly, or daily.

Examples

Example 1

Person A invests in an asset at $100,000 that has a rate of growth of 8% and is compounded Annually. The investment’s time period is 10 years after which we can sell the asset and gain the benefits. What is the future value of the investment at the time of selling?

The future value of the investment can be calculated using the formula shown below.