An investment calculator is a tool that is used to calculate a specific parameter for an investment plan. The tabs in the following represent the parameter to be calculated. For example, if you want to know the return rate needed to reach your investment goal with a investment schedule, please click the “Return Rate” tab to calculate that. This investment calculator is based on a fixed return rate.
The Investment Calculator can assist you to choose the return on investments with a fixed rate of return. A good example of this type of investment is a Certificate of Deposit, or CD, which is available in most banks. A CD is a low risk investment, because, up to the amount of $250,000, the Federal Deposit Insurance Corporation, a U.S. government agency, guarantees it. It pays a fixed rate of interest for a specified amount of time. The longer you leave your money in the CD, the better the rate of interest you can receive. Other low-risk investments of this type are savings accounts and money market accounts, which pay relatively low rates of interest.
Risk is a key characteristic when making investments. In general, one is paid a premium for taking the greater risk. So, for example, if you acquire the debt of some companies, which is rated at a risky level by the agencies that determine levels of risk in corporate debt (Moody’s, Fitch, Standard & Poor’s), you will earn a very high rate of interest on it, but you run the risk that these companies might go out of business, and you could lose your investment.
There are, of course, less perilous companies to invest in. Buying bonds from companies that are highly rated for risk by the agencies is much safer, but one earns a lower rate of interest. Bonds can be bought both for the short term and the long term.
Real estate is another profitable and popular investment to invest. The most fundamental way of investing is to buy low-valued property that you have reason to think will appreciate in value over a reasonable period of time. Usually, an influx of people or an increase in development makes the property more valuable. Alternatively, land that you purchase can be built on and made more valuable in this way.
Another way to invest in real estate is to buy houses or apartment buildings and to rent them. The income from rental properties – it is known as yield – can rise to 30 percent or 40 percent per year if the properties are managed carefully, and the proper location is chosen.
For investments with a fixed rate of return, this Investment Calculator will help you to determine interest payments and rate of return, as, for example with a bond investment. The investment calculator also shows how much you must invest each month to reach a given target.