Online Investment Calculator: What It Is and How to Use It
People invest to generate additional income. But it's important to understand what returns to expect, how long to invest, and what starting capital is required. To forecast investment profitability, calculate the optimal period and capital, you can use an online investment calculator. If reinvestment is selected (reinvesting profits to earn returns on the growing balance), the calculator uses compound interest. Without reinvestment, it applies simple interest.
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What the Savings Calculator Can Do
The tool allows you to:
- Determine profitability: To reach a savings goal, investors need to know how much to invest and at what rate. This is the most common use of the tool — as a return calculator.
- Calculate interest rate: The final amount depends as much on the rate as on the initial investment.
- Determine initial capital: If you know the rate and your target amount, all that’s left is to define the amount to invest.
- Calculate investment period: The investment calculator using simple or compound interest in tenge shows how long it takes to reach your goal, based on the rate and capital input.
- Calculate contribution amounts: Regular deposits (to a savings account, for example) increase the final amount. To estimate when you’ll reach your goal, you need to know how much to contribute. The online savings calculator provides this answer.
More About Reinvestment
When an investor reinvests profits to generate additional returns, it’s called reinvestment. The calculator can compute reinvestment on different schedules — monthly, quarterly, semiannually, or annually. As noted, reinvestment uses the compound interest formula.
What Is Compound Interest?
It’s interest calculated on an increasing amount. The more frequently interest is added to the capital, the greater the overall return.
The compound interest formula is:
A = P(1 + r/n)nt.
Where:
- A is the final amount (total income).
- P is the starting capital (the investment amount).
- r is the annual interest rate.
- n is the number of compounding periods per year.
- t is the number of years.
If reinvestment is not used, simple interest is applied with the formula:
A = P × (1 + r × t)
This formula does not include the n variable, but other elements remain the same.
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Suppose an investor puts 500,000 tenge into an investment for 7 years at a 10% interest rate.
With monthly reinvestment:
A = P × (1 + r/n)nt = 500,000 × (1 + 0.1/12)12 × 7 ≈ 1,004,000 tenge
Without reinvestment:
A = P × (1 + r × t) = 500,000 × (1 + 0.1 × 7) = 850,000 tenge
Thus, the difference between the two calculations is 154,000 tenge. Reinvestment allows a higher return over the same period with the same rate.
You can use the investment calculator on the Bank CenterCredit website. It allows you to analyze your investments based on two popular criteria — goal achievement period and deposit amount. This helps you navigate the world of investing and set concrete financial goals.
This article has been translated from its original language using neural network-based translation technology.
