This investment calculator forecasts the growth of your investment or savings account with or without regular contributions by compound interest within a given time period. There is in depth information on this topic below the application.

Currency:
Initial deposit: *
\$
\$
\$
Savings Term: *
Y
Interest rate: *
%
Compounding frequency:
Annual inflation rate:
%
Tax rate:
%

## How does this investment calculator work?

The financial tool determines your investment’s ending balance as well as the total interest/return received in any of the following cases:

• When you need to calculate the compound interest for a simple starting deposit only (initial deposit), meaning there are no regular yearly or monthly savings made.
• When you are trying to figure out the compound interest for an initial deposit with regular yearly adds.
• When you are trying to determine the value of the compound interest for a one time deposit with regular monthly savings.
• When trying to determine the compound interest figure for starting deposit with both annual and monthly contributions.

Apart from handling all the above calculations this investment calculator allows users choosing from a wide range of compounding frequencies such as: annually, semi-annually, quarterly, monthly or even continuously; and also considers the moment the regular savings are added to the account, which can be either at the beginning of each compounding period and end of it.

The variables that should be given are:

• Initial deposit.
• Savings term.
• Rate of interest/return.
• Compounding frequency.
• Rate of inflation.
• Tax rate.

The algorithm behind this investment calculator uses the standard compounding interest formulas as explained below:

• Monthly:

AMT = Principal*[(1+((r/12)/100))^(12*n)]

• Quarterly:

AMT = Principal*[(1+((r/4)/100))^(4*n)]

• Semiannually:

AMT = Principal*[(1+((r/2)/100))^(2*n)]

• Annually:

AMT = Principal*[(1+(r/100))^(2*n)].

Where:

r = interest rate for the frequency specified.

n = number of years.

AMT = total ending balance.

Please note that the above algorithm assumes that the rate of return is fixed over the period of time specified.

## Which are the main types of investment instruments?

• One of the safest instruments to invest in is considered the certificate of deposit (often abbreviated as CDs) which has a low risk profile because the amount is guaranteed by the Federal Deposit Insurance Corporation that is a governmental agency within U.S. The peculiarity of this investment is that the bank pays a fixed interest rate on the money deposited, thus the longer the term the money are deposited the higher the chances to receive a higher interest rate are.
• Another instrument a bit more flexible than fixed CDs, with a low risk profile but offering lower interest rates is the savings account where the holder can occasionally and/or regularly deposit money.
• Bonds issued by private companies or by governmental or local public entities, offer a rate of return that depends on the risk profile of the entity in question. The highly rated for risk the issuer is the higher the rate of interest will be. Investors buy and hold bonds either for a short to medium period of time with the intention to generate revenue from selling them before their maturity at a higher quote than they purchased it, or they hold them until maturity. In case the bonds are held until maturity, apart from the interest payments that are usually twice/one per year, the investor will receive also the face value of the bond at the maturity time.
• Investing in stocks and equities is another option an investor has. It should be mentioned that this form of investment is riskier than the previous instruments because the interest/return rate is not a fixed one, but an uncertain and volatile one while the market price of stocks may increase/decrease depending on various factors that are not in the control of the holder.
• Investing in real estate was another instrument very profitable until the financial crisis begun. Investors were buying low-valued properties with the hope that their value will appreciate over years or in order to rent it for personal or business use to another party paying a rental fee.
• Investing in gold, platinum or other commodities such as jewelry or art objects.

## Reasons to invest your money…

• You need to secure your family!
• You need a decent life standard at retirement!
• You need to secure against inflation rising by compensating with revenues/interest generated by the business!
• You may need to finance unwanted events in the future such as health problems, accidents or any similar!
• You may need to finance travel plans, new car purchase or even a home refurbishment.

24 Mar, 2015