Investments are important to build a financial corpus to meet one’s future financial goals. Unless one makes necessary investments in financial instruments, it’s almost impossible to ensure a financially sound future. Either to ensure a smooth retired life or meet the future expenses of your child; investment is crucial for meeting all of those requirements. However, not all of us can make informed choices when it comes to investment due to the plethora of options available in the market, such as bonds, mutual funds, shares, property, etc. An investment calculator can help you plan your investments better by helping you approximate the returns on your investment.
What is an Investment Calculator?
An investment calculator is a tool that gives you a glimpse of the kind of returns you can expect on a specific amount of money, and the duration you need to stay invested in the plan to get the returns as expected. This makes it possible for anyone, even without investment experience to anticipate the returns on their investment. One of the investment options available in the market is ULIP which gives better returns as its market-linked; however, it’s important to understand your risk appetite to determine how much money you can invest.
Benefits of Using an Investment Calculator and a ULIP calculator?
Since we have brought up investments and ULIPs, know how these can benefit you.
A ULIP calculator allows investors to anticipate how much returns they can expect on assumed rate of interest on the premiums they are paying on the policy. While an investment calculator will give you an all-round picture across different financial instruments to help you choose the best investment options to meet your financial goals based on your risk appetite.
How to Use an Investment Calculator?
Using an investment calculator is simple. All you need to do is enter a few basic information such as the amount of investment, duration, and premium, and the online tool will display the returns you can expect for your chosen sum, duration across policies.
Now that we have covered the basics of using an investment calculator, let’s look at the benefits of using an investment calculator before investing.
Make Informed Decisions
As an investor, it’s important to make investment decisions that can help you generate maximum returns over the duration you stay invested. Since there are multiple plans available in the market these days, it can be difficult to choose one based on your risk appetite; an investment calculator helps you in choosing plans that match up with your risk profile and financial goals for the future.
Since the entire process is automated, it helps cut down on the time it would otherwise take a person to individually calculate the returns. Not all of us are number crunchers and it can get quite challenging to calculate ROI based on interest rates, as they vary across plans. Moreover, it could take days or sometimes even weeks before a person can come to a decision.
By automating the entire process, it saves time and makes the entire process of going through plans much easier.
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Helps in Financial Planning
Making financially sound decisions when it comes to investment is important to ensure that you make investments that are best aligned with your future financial goals to help you meet expenses such as funding your child’s education, marriage, a trip abroad, or just building a corpus for a post-retirement life.
Meet Short-Term Goals
Meeting long-term financial goals is one thing; even meeting short-term goals requires proper planning. Using an investment calculator or a ULIP calculator will help you generate returns for buying things like a car, or for funding your goals of making a foreign trip.
Helps in Diversifying your Portfolio
As the saying goes, ‘it’s never a wise idea to put all your eggs in the same basket’ the same is true for investments as well. By diversifying your investments across various instruments, you can generate greater returns over the lifetime of your investments. Also, it helps you choose the best investment options based on your risk appetite.
Helps You Prepare for Inflation
Your investment definition must be based on inflation. As it is on a year-on-year high trajectory; therefore, it’s important to make investments that can help you build a corpus to best match the rate of inflation in the future. An investment calculator will help you plan those investments better by letting you choose the investment instruments carefully.