Investment in the simplest of terms is an asset acquired monetarily or otherwise with the expectation that it will generate income or appreciate in the future. In the words of one of the world's richest men Warren buffet, “the process of laying out money now to receive money in future" can be considered to be investing. In Other Words, investing can be defined as an act of allocating money or other resources into an endeavor with the expectation of acquiring future benefits. Getting advanced education can be said to be investment because acquiring more knowledge will lead to both personal and financial development in the future. Stocks, bonds, starting a business, building a structure etc can be seen as ways to invest. The major benefit of investment is to secure and protect our financial future.

INITIAL INVESTMENT

This is the start up fund required to set up a business or project. It can be said to be the amount or resources needed to kick start a business or an enterprise. It can also be referred to as startup capital. Initial payment can be generated in many ways; it can be the owner's personal money, a loan from the bank or donation from friends.

INITIAL INVESTMENT CALCULATOR

As the name clearly implies, investment calculator is used to evaluate the specific parameter of an investment. Initial Investment calculator helps both young and old investors to ascertain the required startup capital needed to start up a business and also predict investments that will generate expected income in the future. It is a tool used to evaluate the efficiency of an investment, in other words the calculator helps to determine returns the startup capital.

HOW TO MAKE AN INITIAL INVESTMENT CALCULATION

To calculate initial investment, there are certain factors and variables to consider and it is important to note that there is no 100% accuracy attached to the results of the calculation.

1. First step in the calculation is determining the targeted goal of the investment, the interest rate to be gotten and the duration of time the investor will be investing his or her money.

2. Writing out the formula for interest which is: F = P (1 + i) ^n; where F stands for final amount. P represents principle i.e. the initial investment. “I” is the interest rate. N represents the number of years for the business to yield interest.

3. Since the calculation is to determine the initial amount to be invested, the interest formula is written as P = F / (1 + i)^n

4. Input values into the formula.

5. Solve the calculations.

Using an online calculator is a simpler way to do this calculation. It just requires you to input the values and then let the calculator do the main calculations.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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