A savings and investment calculator can be defined as a mathematical calculator used to analyze specific parameters for a business plan. This calculator is also used to equate the effectiveness of two or more different businesses by measuring the amount of return rate in comparative to the cost. The following Parameters are analyzed in a savings and investment calculator:

-    RETURN RATE:

This can be defined as the profit or loss acquired over a specific period of time which is always stated as a percentage of the cost. Return rate can also be seen as the net amount of discount cash flow gotten from a specific investment.

-    STARTING AMOUNT:

This is also known as the principal amount which is the initial amount used at the commencement of a business venture. It is expected to be enough to cover the basic expenses needed to get the business running efficiently to bring in reasonable profits by the end.

-    END AMOUNT:

This can be defined as the anticipated amount at the close of the investment. If all things went well, the end amount value is expected to be more than the starting amount; the difference being the profit.

-    INVESTMENT LENGTH:

This can be defined as the period in which the business was conducted. Usually, the lengthier it is, the higher the risk involved. This is because of the unpredictable future of factors that form the basis of the investment. This means the longer the time involved, the more amplified the return becomes and the bigger the rewards. The risks paid off anyway.

This is also called annuity payment and it stands in form of any additional contributions of investors cash during the length of an investment will lead to increase in returns and greater amounts.

-    SAVINGS:

Savings can be defined as the remaining amount left when the cost amount of an investment and expenditure is subtracted from the amount of disposable an investor earns in a specific period of time. For investors who are financially cautious, this amount, after all expenditures have been met, can be very encouraging; unlike some other investors who have to rely on credits for their investment.

-    INVESTMENT:

This can be defined as an asset that is bought with the expectation that it will yield income and profits and increase in the future. It is also said to be the buying of goods that will not be expended today but are used in the future to generate income.

HOW TO CALCULATE SAVINGS AND INVESTMENT PLAN USING A SAVINGS AND INVESTMENT CALCULATOR

The savings and investments calculator can be used to find the savings expected from an investment. This simple calculator can be downloaded online. This calculator automatically computes and displays the result an investor’s savings. It has different columns which indicate boxes where an investor can impute parameters such as return rates, starting amounts, end amounts, investment lengths and additional contributions. After inputting the values of these parameters, a click on the button will automatically work and display results.

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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