Investment calculators come in various forms, including handheld devices, free or paid apps, and online services. They can calculate time value, dollar cost averaging, inflation, and other variables to help investors make informed decisions.
There are many different types of investment calculators available to suit most any investor’s needs. Investment calculators may include one or more functions to calculate a particular type of investment, including time value, dollar cost averaging, and inflation. Investors can find calculators that are handheld devices, free or paid apps for their smartphones, or they can find them online for free or with a paid service.
A time value calculator helps determine what the future value of an initial investment is. Time value investment calculators can also handle determining the future value of the investment if the investor makes periodic deposits into the account over time. To use this calculator, the investor must enter a hypothetical or estimated rate of return that the investment is paying and the time period for the investment.
Other types of investment calculators are dollar cost averaging. Dollar cost averaging is a specific type of investment strategy for an investor who invests a fixed amount of money on a regular basis. The strategy allows investors to control the amount of cash that is invested in the investment, depending on what the price of the investment is doing. For example, if the price of the investment is falling, then the strategy allows the investor to buy more of the investment.
The dollar cost averaging calculator allows investors to estimate how much the investment account will be worth at the end of a 12 month period. The calculator requires the user or investor to enter hypothetical information. The estimated information includes the rate of return on the investment and an estimated price per share for the investment.
Inflation can easily eat away at the value of an investment account. Using an inflation calculator allows investors to invest today so that their investments will outperform inflation tomorrow. By entering investment information, the user or investor of these types of investment calculators helps them determine if they are investing their money in investments that will continue to grow and stay above the rate of inflation.
Standard financial calculators allow users to determine other variables. Future value, present value, interest rates, and time periods are variables that can be determined by the user of a financial calculator. However, to calculate one of these variables, all the remaining variables must be known or estimated. For example, if you are determining the present value of an investment, then the future value, interest rate, and investment time must be known and entered into the calculator.
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