Calculate Investments, Compound Interest, Future Value - Money Tools
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Calculate an investment, compound interest, periodic investments, future value, annutity - Simple Joe's Money Tools
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Calculate An Investment Tool
The Calculate An Investment tool will help you determine the value or return of an investment.
The return quoted by the brochure or sales agent may sound really good, but is it realistic? What is a reasonable
rate of return on the investment? Just how much will your money grow?
Many people invest blindly. They put their money in any scheme, program or quasi-company that is pushed on them by
friends or relatives, only to find out years down the road that their money would have serviced them better in just
a standard bank account. Or worse, impossible returns are promised and reality only sets in after years of frustration.
The two basic methods for investing are investing a lump sum, or investing in increments by making regular "payments." With all
investments there is the expectation that the investor will be given more money than he put into the investment. This additional
money or interest can come in two forms. Interest payments may be made on a regular basis for the use of the investor's money.
For example, an investment of $10,000 at 10% APR would pay $1000 each year that the money is invested.
The other method for "paying" interest is called Compound Interest. Instead of sending the investor a check for the $1000,
the $1000 is added to the investment amount. After the first year the investment amount grows to $11,000. Next year the 10%
interest rate will apply to the original $10,000 as well as the "accumulated interest" of $1000. Thus the interest paid for the
next year would be $1100. This compounding of interest is the most common method of receiving a return on an investment.
Eventually, of course, the investment is cashed in or redeemed and the investor must be paid the original investment amount as
well as the accumulated interest.
Getting back to the two types of investments, you can use the Compound Interest calculation tool to determine the value of
an investment after a number of months or years. Enter the amount invested, the interest rate or rate of return, and the number
of months or years. The tool will calculate the value of your investment after the time period and show you how much of that is
from accumulated interest. Also shown is the overall rate of return.
The other type of investment is known as an "annuity." This is a regular payment into an investment account such as a mutual fund.
The regular payments may be on a monthly, quarterly, yearly or other basis. Each payment is usually the same amount and the interest
rate is assumed to be constant. Although the equal payments and constant interest are not in line with what really happens, making
these assumptions allows us to calculate an estimate of the return on the investment.
As with the Compound Interest tool, enter the amount you will invest each period, select the period type, enter the number of years to
project the investment and then enter a rate of return. The total value of the investment will be calculated. Also shown is the total
amount of the payments you made and the portion of the total that resulted from the interest accumulation.
The Scenarios buttons allow you to create multiple scenarios with different values. The scenarios may also be printed for
comparison and review.
When you select the Print Scenarios button the following window appears:
Check the box next to each completed scenario that you want to print then select the View or Print button.
To print a schedule of how the investment will grow, select the Print Accumulation Schedule button:
Next: Project My Investments
Click on a button above to learn more about the tool.
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| Page Title: |
Calculate Investments, Compound Interest, Future Value |
| Keywords: |
Simple Joe Money Tools simple financial calculator personal finance pc software investment calculator investments calculate future value periodic annuity compound interest rate of return annuities |
| Summary: |
Calculate an investment, compound interest, periodic investments, future value, annutity - Simple Joe's Money Tools |
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