## Investment Calculator

An investment calculator can be used to calculate the amount including the income earned on the initial amount that was invested in any kind of investment plan or product which offers compounding earnings.

#### Investment Calculator

I x ( 1 + r/F )^{nxF}

- I is the initial amount invested
- r is the rate of interest
- F is the frequency of interest being paid
- n is the the number of periods for which investment shall be made.

### About Investment Calculator

The formula for calculating Investment is per below:

**For one-time investment**

**M = I x ( 1 + r/F )**

^{n * F}**For monthly investment**

**M = I * (1+r)**

^{F}+ i * [(1+r)^{F}– 1 / r ]Wherein,

- M is the total amount at the end of the investment period
- I is the initial amount invested
- i is the fixed amount invested at regular intervals
- r is the rate of interest
- F is the frequency of interest is paid
- n is the number of periods for which investment shall be made.

There are many investment products available in the market that includes mutual funds, fixed deposit, retirement schemes, company deposit, certificate of deposit, recurring deposit, etc. All these investment schemes have a different kind of payment system for example in case of fixed deposit the amount is invested initially and then interest is accumulated and is paid to the investor and there is another type of investment plan wherein the investor invests the amount on regular intervals and then interest is earned on same which is type of recurring fixed deposit. Mutual funds also have both kinds of investment options. Therefore, if the investor wants to calculate what will be his maturity amount invested in any kind of investment plan, this calculator will be useful to calculate the same.

### How to Use Investment Calculator?

One needs to follow the below steps in order to calculate the Investment.

**Step #1: **Determine the initial amount which is supposed to be invested and also whether it is invested for one time or after the initial amount, there will be investment amount paid at regular intervals.

**Step #2: **Figure out the rate of interest that would be earned on the investment.

**Step #3: **Now, determine the period for which it shall be invested.

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**Step #4:** Divide the rate of interest by the number of periods the interest or the investment income is paid. For example, if the rate paid is 12% and it pays quarterly then the rate of interest would be 12%/4 which is 3.00%.

**Step #5: **Now use the formula that was discussed above in point 1) in case the investment is made lumpsum and use formula 2) in case the investment amount is made at regular intervals.

**Step #6: **The resultant figure will be the maturity amount that would include the investment income as well.

### Example #1

Mr. A is working in a nationalized bank and doesn’t like to invest in capital markets. He has spent around 20 years of his life working in the operations department of the bank and has never looked to come out of it. Recently he received a bonus from Bank amounting to $18,000 as the lumpsum amount and he didn’t have any fund requirement and hence decided to invest the lump sum amount in fixed deposit scheme for 10 years wherein the bank would pay him 6.9% per annum which will be compounded quarterly. Based on the given information you are required to calculate the amount that he would receive at maturity.

**Solution:**

We are given below details:

- I = $18,000
- r = Rate of interest which is 6.90% and quarterly it would be 6.90% / 4 which is 1.73%
- F = Frequency which is quarterly here, hence it will be 4
- n = number of years the investment proposed to be made which is 10 years here.

Now, we can use the below formula to calculate the maturity amount.

**M = I * ( 1 + r/F )**

^{n * F}- = $18,000 * ( 1 + 6.90%/4 )
^{10 * 4} - = $18,000 * ( 1.01725)
^{40} **= $35,676.35**

Compounded Interest Earned would be

- = $35,676.35 – $18,000.00
**= $17,676.35**

### Example #2

Mr. Chandler is graduate from New York University in finance and he wanted to be self-dependent and didn’t want to join his family business and he decided to do a job and then after a couple of years down the line, he would like to open up his office.

The estimated cost for the same comes around $45,000. Since he doesn’t have any funds in hand and therefore, he decides to accumulate funds say after 12 years and then quit the job and start his own business. He decides to keep aside $200 every month and would invest in a hybrid fund where on average he can earn 7% if he invests for that long period.

Based on the given information, you are required to determine whether the goal of Mr. Chandler will be met or not?

**Solution:**

We are given below details:

- I = NA – there is no initial amount here
- i = Fixed amount that will be invested at regular intervals will be $200
- r = Rate of interest which is 7.00% and monthly it would be 7.00% / 12 which is 0.58%
- F = Frequency which is monthly here, hence it will be 12
- n = number of years the investment to be made which is 12 years here.

Now, we can use the below formula to calculate the maturity amount.

**M = I * (1+r)**

^{F}+ i * [(1+r)^{F}– 1 / r ]- = 0 x ( 1 + 0.58% )
^{144}+ $200 x [(1+0.58%)^{144}– 1 / 0.58%] - = 0 x ( 1.0058)
^{144 }+ 200 x 224.69 **= $44,939.00**

Therefore, as it can be seen that he would be successful in getting the desired funds after 45 years provided the fund in which he has invested earns on an average of 7% per annum.

### Conclusion** **

This calculator as discussed above can be used to calculate the maturity amount along with the investment income that shall be earned. Both types of investment plan maturity amount can be calculated that is whether the one-time lumpsum amount or invested in regular intervals.

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This has been a guide to Investment Calculator. Here we provide you the calculator that is used to calculate the amount earned on the initial amount that was invested in any kind of investment plan along with the examples. You may also take a look at the following useful articles –