The freedom fund is an important financial tool that gives you the power to become financial freedom. It is a fund for emergencies, saved from your salary after taking care of all your financial obligations.
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Once you start earning you are advised to start investing to earn returns for your future financial goals. But the term often seems scary to most people. It is overwhelmingly confusing to know where should you invest, how much should you invest, and for how long should you invest.
Well to put it simply, investment is the process of getting more cash out than you put in initially. An investment calculator is the solution to your investment problems as it will help put a lot of the queries emerging in your mind to rest. It is a tool that helps you ascertain the amount you could possibly make over time.
Whether you are just getting started with making investments in Dubai or whether you are an already seasoned player in the field of investing, an investment calculator is your friend. It will help you as an investor to figure out how to meet your financial goals. It shows the initial investment you make along with the frequency of your contributions. It also depicts how risk tolerance can affect your investment.
Want to know more? Follow us as we guide you through the basics of investing and how an investment calculator works:
Investing allows you to take that money that is sitting idle with you or the money you are not spending and put it to work to earn you gains. The money you invest in bonds and stocks is important for companies as well as governments to grow, all while it earns you profits in the form of compound interest. With time this interest adds up to make a nest egg of savings for you.
One does not necessarily have to research each individual company and indulge in buying and selling of bonds by themselves in order to become an investor. In fact, this approach is not the wisest if you want to become a pro at the investment game and earn consistent returns. This is where the brokers come in to help guide you through the maze of investing.
This calculator illustrates how much can a potential investment earn on the basis of the annual rate of return expected by you. The rate of return will further depend on whether the interest is compounded annually or monthly and this in turn depends on the frequency of the contributions made by you. Usually, an investment calculator assumes that an investor makes their contribution at the beginning of every period unless chosen otherwise.
The investment calculator can also help determine one of the several different variables concerning the investments with a fixed return rate. Let us see the different variables involved in investing:
For an archetypal financial investment, there are four pivotal variables that make up any investment. They are-
Most investment calculators have certain fixed categories that the investor needs to fill in to get an estimate of their returns on a future date. The following categories can be found in most calculators:
If, however, you wish to invest a lump sum amount each year, you can choose ‘annually’ instead. Include your annual contribution alongside it. If on the other hand, you do not wish to make any contributions, you can choose either ‘monthly’ or ‘annually’ and put 0 in the amount section.
It is important to note that an annual contribution of 1200 and a monthly contribution of 100 seem like they should generate the same returns, but that is not the case. The end balance in both cases will be different because the annual contributions are compounded annually as opposed to monthly contributions that are compounded monthly and frequent compounding leads to more growth over a period of time.
There are different ways you can invest your money to meet your financial requirements in the future. Listed below are some common ways to invest:
Investment might seem like a complicated feat but with an investment calculator, you can easily conquer your fears and doubts. Remember, investments might be risky, but not investing is far more risky for those who want to accumulate some savings for their retirement or achieve their financial goals.
Guide for Investment Plan in UAE
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