An investment calculator is an online calculation tool that helps you estimate the future value of your investments. This calculator is essential for planning financial goals, understanding the impact of compound interest, and making informed investment decisions.
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Investment Plans
Generate wealthEarn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^On premiums (under 80C) and on maturity (under
10(10D))
An investment calculator is a tool that helps you estimate how much your money can grow over time. You can see potential returns by inputting details like the initial amount, interest rate, and investment duration. It is the best way to plan for your financial future and make informed decisions about where to invest.
How Does An Investment Calculator Work?
The workings of an investment estimator are very simple and easy. You tell the calculator how much you are investing, how often you will add more amount, for how long, and what return you expect. Let us understand these stages for working on an investment return calculator below:
Stage 1- Insert Values:
You will provide details like: Initial Investment, Planned Regular Contributions (optional), Investment Period, and Expected Rate of Return (estimated).
Stage 2- Calculation Formula:
The investment calculator initially uses a compound interest formula to project future Return on Investment (ROI):
A = P (1+r/n)^nt
Where:
A = Amount of money accumulated after n years, including interest.
P = Principal amount (initial investment).
R = Annual interest rate (decimal).
N = Number of times that interest is compounded per year.
T = time the money is invested for in years.
KEYNOTE: Compound interest considers both the initial investment and the interest earned on previous interest payments.
Stage 3- Output:
The compound interest calculator in India provides an estimate of the following:
Future Value: The total amount you will have at the end of your investment period.
Other Crucial Details: An investment calculator in India can also help you with the required return rate to reach a specific future financial goal.
Parameters Involved in an Investment Calculator
The key elements involved in an investment calculator are listed below:
Initial Investment (Principal): The amount of money that you initially invest.
Regular Contributions: Any additional amount you plan to invest periodically, like monthly deposits.
Investment Period: The length of time you plan to hold the investment, typically measured in years.
Expected Rate of Return: The annual percentage rate at which your investment grows. This can be an expected or historical rate of return.
Compounding Frequency: How often the interest is applied to the investment (e.g., annually, semi-annually, quarterly, monthly, daily).
Future Value: The amount of money that the investment will be worth after the specified period, given the rate of return and compounding frequency.
Power of Compounding Principle
The power of compounding is often called "interest on interest." It is a financial principle that shows how a small investment can grow into a large amount of money over time if the interest earned is reinvested instead of being withdrawn.
Illustration of the Power of Compounding
This concept describes compound interest, where you earn interest not only on the initial amount but also on the interest from previous periods.
Let us illustrate this with a simple example. Assume you invest ₹10,000 at an annual interest rate of 8%. Below is a table showing the value of the investment over different periods:
Year
Principal (₹)
Interest Rate (%)
Interest Earned (₹)
Total value (₹)
1
10,000
8
800
10,800
2
10,800
8
864
11,664
3
11,664
8
933
12,597
5
13,499
8
1,080
14,579
10
18,627
8
1,490
20,117
20
43,219
8
3,458
46,677
30
100,627
8
8,050
108,677
HIGHLIGHT: As seen in the table, the total value of the investment grows significantly over time. By the end of 30 years, the initial ₹10,000 investment grows to ₹108,677, showcasing the exponential growth due to compounding.
Different Types of Investment Calculators in India
There are different types of investment calculators available online, each suited for a specific purpose. The major types of calculators are:
One-time/ Lumpsum Calculator
Monthly Investment Calculator.
The following cards will help you to simplify the two types of return on investment calculators available in India and offer a brief explanation of their utility:
One-time or Lumpsum Investment Calculator:
Definition: Helps you calculate the future value of a single, one-time investment.
Estimates: Future value of the investment based on factors like interest rate and period of investment.
Benefits: Useful for understanding the growth potential of lump sum investments, aiding in financial planning for major expenses like buying a house or funding education.
Total Lumpsum Invested Amount
Investment Period
Estimated Returns on Investment
Maturity Amount*
₹ 1 lakh
20 Years
15%
₹ 16.37 Lakhs
₹ 1 lakh
20 Years
20%
₹ 38.34 Lakhs
₹ 1 lakh
20 Years
25%
₹ 86.74 Lakhs
₹ 1 lakh
20 Years
30%
₹ 1.90 Cr
Monthly Investment Calculator:
Definition: Helps you calculate the future value of regular monthly investments.
Estimates: Future wealth accumulation through systematic monthly contributions.
Benefits: Assists in planning and optimizing investments for long-term goals by determining the potential growth of regular savings over time.
Regular Invested Amount
Investment Duration
Period of Regular Investments
Estimated Returns on Investment
Total Maturity Amount
₹ 10K/Month
10 Years
10 Years
15%
₹ 12 Lakhs
₹ 10K/Month
10 Years
10 Years
20%
₹ 12 Lakhs
₹ 10K/Month
10 Years
10 Years
25%
₹ 12 Lakhs
₹ 10K/Month
10 Years
10 Years
30%
₹ 12 Lakhs
Investment Calculators for Different Investment Options
Some of the common types of annual investment calculators for various best investment options are listed below:
Definition: Helps you estimate how much income tax you owe or how much tax refund you might receive.
Estimates: Income tax liability or refund based on your income, deductions, and tax credits.
Benefits: Helps in tax planning by providing insights into your tax liabilities, optimizing deductions, and ensuring compliance with tax laws.
Why is it Important to Invest?
Learn the importance of investing in the best investment plans from the following points:
Wealth Growth: Investment plans help you grow your wealth effectively.
Financial Security: High-return investments provide a secure financial base, minimizing risks.
Goal Achievement: Strategic investments align with financial goals, facilitating milestones.
Beat inflation:Long-term investment plans help you outpace inflation, preserving and enhancing your purchasing power. You can use a 5-year investment plan calculator to estimate the return on investment with these plans.
Tax Benefits: The tax-saving investments offer tax benefits, optimizing savings and returns.
Peace of Mind: Reliable investments bring reassurance, freeing you from financial anxieties.
Capital Appreciation: Your capital steadily grows with the right investment choices.
Retirement Planning: Wise investments ensure a comfortable retirement, securing your future.
Compounding Returns: Reinvesting your earnings brings exponential growth of your investments over time.
Diversification: A diversified portfolio of your investment plans will help you to spread the investment risk for financial stability.
Benefits of Investment Calculator
Investment calculators are helpful for:
Estimating Growth: Calculating how much an investment will grow over a specified period.
Comparing Scenarios: Assessing different investment strategies, such as varying the contribution amount or rate of return.
Understanding Compounding: Illustrating how compound interest affects the value of an investment over time.
Planning for the Future: Determining how much you need to invest to reach a financial goal, like retirement or education costs.
In Conclusion
An investment calculator is a valuable tool to estimate the potential growth of your investments over a period. By entering key information like initial investment, expected return rate, and investment duration, you can gain insights into how your money could grow. It helps you make informed decisions about your financial goals, allowing you to compare different investment scenarios and choose the best strategy to maximize your returns.
Frequently Asked Questions
What is an investment calculator?
An investment calculator is a web-based tool that helps you estimate the potential returns on your investments. These calculators consider factors like investment amount, tenure, and expected rate of return to give you a projected future value.
What are the different types of investment calculators?
There are various investment ROI calculators available, including SIP (Systematic Investment Plan) calculators for mutual funds, fixed deposit calculators, PPF (Public Provident Fund) calculators, and even goal-based calculators to help you plan for specific needs like retirement.
Where can I find an investment calculator?
Many financial institutions and investment platforms like Policybazaar in India offer free investment calculators on their websites.
What information do I need to use an investment calculator?
Typically, you will need to input details like your investment amount (lump sum or SIP), investment horizon (in years), and expected rate of return. Some calculators might ask for additional details specific to the investment type.
Are investment calculator results guaranteed?
No, the results provided by investment calculators are estimates only. Actual returns can vary depending on market fluctuations, interest rate changes, and other factors.
What is the benefit of using an investment calculator?
Investment calculators help you plan your finances better. By estimating potential returns, you can understand how much you might need to invest to achieve your financial goals.
What are some limitations of investment calculators?
The key limitation of a return on investment calculator is that it does not account for all investment fees, taxes, or inflation. These calculators also rely on your estimated rate of return, which may not be completely accurate.
Is it safe to use online investment calculators?
Reputable financial institutions and investment platforms generally offer secure calculators. However, avoid entering any sensitive financial information directly into the calculator.
Can I use an investment calculator to choose an investment option?
While calculators can be a helpful tool, they should not be the sole factor in your decision-making. Consider your risk tolerance, investment goals, and overall financial situation before choosing an investment.
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Past 10 Years' annualised returns as on 01-04-2025
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
Generate wealth Earn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^ On premiums (under 80C) and on maturity (under 10(10D))
Compare & Choose 30+ Plans and 150+ Fund options
