# Investment Calculator

Last Updated :

21 Aug, 2024

Blog Author :

Edited by :

Ashish Kumar Srivastav

Reviewed by :

Dheeraj Vaidya, CFA, FRM

Table Of Contents

## Investment Calculator

An investment calculator can calculate the amount, including the income earned on the initial amount invested in any investment plan or product offering compounding earnings.

##### Table of contents

### About Investment Calculator

The formula for calculating Investment is as below:

**For one-time investment**

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

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

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

^{F}+ i *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.

Many investment products are available in the market, including mutual funds, fixed deposits, retirement schemes, company deposits, certificate of deposit, recurring deposits, etc. All these investment schemes have different kinds of payment systems. For example, in the case of a fixed deposit, the amount is invested initially, and then interest is accumulated and paid to the investor; there is another type of investment plan wherein the investor invests the amount at regular intervals, and then interest is earned on the same , which is a 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 investment plan, this calculator will be useful for calculating the same.

### How to Use Investment Calculator?

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

**Step #1: **Determine the initial amount which is supposed to be invested and whether it is invested for one time or after the initial amount; there will be an 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.

**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, the interest rate would be 12%/4, which is 3.00%.

**Step #5: **Now use the formula discussed above in point 1) in case the investment is made lump sum 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 also include the investment income.

### Example #1

Mr. A works in a nationalized bank and doesn’t like investing in capital markets. He has spent around 20 years of his life working in the bank's operations department 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 a fixed deposit scheme for ten years wherein the bank would pay him 6.9% per annum which will be compounded quarterly. Based on the given information, you must calculate the amount he would receive at maturity.

**Solution:**

We are given the below details:

Sr no | Particulars | Amount |
---|---|---|

1 | Principal Amount | $18,000.00 |

2 | Rate of Interest | 6.90% |

3 | Frequency in months | Quarterly |

4 | Frequency in number | 4 |

5 | n- number of period to be invested | 10.00 |

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

Since he doesn’t have any funds in hand, he decides to accumulate funds 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. The estimated cost for the same comes to around $45,000.

Based on the given information, you are required to determine whether Mr. Chandler's goal will be met.

**Solution:**

We are given the below details:

Sr No | Particulars | Amount |
---|---|---|

1 | Initial Amount | - |

2 | Equal Amount Savings | $200.00 |

3 | Length of Investment | 12 |

4 | Rate of Interest per annum | 7.00% |

5 | Frequency of Installment | 12 |

6 | Monthly Rate | 0.58% |

7 | Total number of payments | 144 |

- 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 *- = 0 x ( 1 + 0.58% )
^{144}+ $200 x - = 0 x ( 1.0058)
^{144 }+ 200 x 224.69 **= $44,939.00**

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

### Conclusion** **

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

### Recommended Articles

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