Personal Finance

All You Need to Know About Return On Investment Calculator

Investment is necessary for smart financial planning. You cannot only depend on increasing your savings by controlling your expenses. You need more than that. You need to multiply your wealth by making investments.

But the greatest challenge before you start investing is to know how much to invest, and the return the investment would yield. A Return-on-Investment Calculator can save you a lot of hassle when it comes to making the decision.

But before we get started, let’s understand what Return-on-Investment is.

Return On Investment Calculator

What is ROI?

Return-on-Investment is a metric used to determine the probability of earning profits and the return upon investing in financial instruments. Determining ROI can help you make better investment decisions.

Terms You Should Know Before Using Rate-on-Investment Investment Calculator

Investment Tenure

Investment tenure is the duration of the investment plan. If it’s a premium based investment, you have to pay premiums throughout the tenure, or as long as your plan instructs.

Nevertheless, investment tenure is an integral aspect that you have to add when you use a Return-on-Investment Calculator.

Investment tenure would be determined by your preference and financial goals as well. It will also impact the amount of premium. If you go for short-term investment plans with a shorter investment tenure, the premium would be higher. Likewise, a longer investment duration would entail a lesser premium. However, you must decide the tenure as per your requirement.

Payment Frequency

Premium based investment provides you with the option of deciding premium payment frequency. You can invest monthly or annually, as per your convenience.

What is Return-on-Investment Calculator and How Does it Work?

Return-on-Investment Calculator is an online tool that helps you calculate the approximate amount an investment will provide. As every investment instrument provides a different rate on investment, it is recommended that you use the calculators that calculate results based on investment plans.

For instance, if you are planning to invest in a ULIP scheme, you can use ULIP calculators to get accurate results.

How to Use Return-on-Investment Calculator

Although all Return-on-Investment Calculators work differently than ULIP calculators or any other kind of calculator, here’s how Max Life Insurance Return-on-Investment Calculator works.

Step 1:  Enter your personal details such as name, date of birth, mobile number, gender, and annual income.

Step 2: On the next window, select lump-sum payout and investment duration. Then select the type of investment plan.

Step3: Enter the investment amount, payment frequency, tenure, and maturity date.

Based on these figures, the return-on-investment calculator will calculate the maturity amount and the premium payments you would have to make.

Benefits of Using Return-on-Investment Calculator

Aids Financial Planning

You can calculate the maturity amount using Return-on-Investment Calculator. This maturity amount would help your financial planning. You would know which investment instrument to invest in to accumulate greater wealth. Accordingly, you would be able to

create a high-return investment portfolio.

Decision Making Becomes Easier

Knowing what you would earn on maturity would give you a better idea of your future financial standing. Consequently, it would facilitate easier decision making – especially purchasing decisions.

For instance, if you are planning to buy a car, but unsure if it would affect your savings. Knowing that you would earn a particular investment return, would help you decide if purchasing a car is a financially wise decision.

Ease to Use

Contradictory to the prejudices attached to online investment tools, Return-on-Investment Calculator is easy to use. You just have to fill in your personal details, enter the amount that you are planning to invest, the investment tenure, and payment frequency. Leave the rest on the Return-on-Investment Calculator.

No Calculation Mistakes

Return on Investment is calculatedmanuallyusing this formula.

  • R = Return.
  • Vf = Final Value (including dividends and interest).
  • Vi = Initial value.

Ascalculating the rate of Investment manually is subject to calculation errors, using the online Return-on-Investment Calculator would give you results without any mistakes or calculation errors.

You Can Make Decisions According to your Affordability

As an investment calculator provides you with a clear idea of the premium you have to pay, you can easily decide if a particular investment plan comes with an affordable premium. That said, with various tools in hand, you can increase or decrease plan terms, investment value to reach a premium value you can afford.

Return-on-Investment Calculator cannot only aid your financial planning but make your work easier. There are lots of Return-on-Investment tools available on the internet, you can use the ones that provide results according to your investment plans.

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About the author

Tejas Maheta

Hi, I'm Tejas Maheta. A blogger & Internet marketer from India.