Investment Calculators and Projecting Returns

The goal of investing is always the same regardless of the type of investment or the amount of money invested – high return on investment.  When the right investments are made, you could make significant money but when the wrong investments are made, the opposite would be true.  Of course, market fluctuations play an important role in how well an investment would do and some types of investments are naturally riskier than others are.  No matter what, the key to being successful as an investor is to use certain tools and resources available.

The goal of investing is always the same regardless of the type of investment or the amount of money invested – high return on investment.  When the right investments are made, you could make significant money but when the wrong investments are made, the opposite would be true.  Of course, market fluctuations play an important role in how well an investment would do and some types of investments are naturally riskier than others are.  No matter what, the key to being successful as an investor is to use certain tools and resources available.

One such tool is the investment calculator, which is an excellent way of projecting returns.  Instead of investing based on an educated guess, with this kind of calculator you would have facts on which to base your investment purchase and sell.  Investor calculators are found all over the internet, free to use.  While investment calculators all work off the same concept, some are constructed slightly different.  The thing to remember is that to determine potential return on investment with a calculator, the process does not need to be overly complicated.

In fact, if you were to use any search engine such as Google.com, Bing.com, or Lycos.com, you would simply type in the search keywords “investment calculator.”  With that, you would receive page after page of investment companies, banks, privately traded companies, and others that offer their version of the investment calculator.  All you need is one that takes three pieces of information you would enter and then produces the information needed so you can make wise investment choices.

The great thing about the investment calculator is that in addition to showing return on investment, it also shows losses.  In addition, you could use the calculator to determine return on investment for current investments or determine what the return on investment would be if you were to make certain choices for future investments.  Obviously, this simple tool becomes a very powerful player in the world of investment, whether as an individual, entrepreneur, or corporation.

As an example, using the calculator at www.bankrate.com, if you currently had savings of $50,000, had an investment goal of $100,000 specific to corporate bonds, and anticipated reaching that goal within 10 years, you would be required to invest $7,195.36.  You can use literally any figures to come up with answers specific to your goals.  Of course, if your financial situation changes or your investment goals need to be modified, you would simply reenter the information for new information on how to get the return on investment wanted.

Another resource for investment calculators is found at Money Zine, found at www.money-zine.com.  The benefit here is that various calculators are provided, each with a specific purpose to include the following:

•    Stock Option Calculator – This calculator would help you determine potential value of stock options.
 
•    Bond Yield Calculator – With this, current bond yield along with bond yield to maturity could be calculated.  While several pieces of information would need to be entered, it is an extremely helpful investment calculator.

•    Taxable Equivalent Yield Calculator – For this, you would have the ability to determine federally tax exempt equivalent, as well as tax-free yield on any bond not subject to state or federal income tax.

•    CAPM Calculator – For a Capital Asset Pricing Model Calculator or CAPM, this would be ideal.  This calculator determines expected return on a capital asset regardless of risk level.

•    Intrinsic Value and ROI Calculator – To evaluate a stock being researched, you can enter just three pieces of information and have insight needed.

•    Black Scholes Calculator – Using this calculator, you would have the ability to determine value of a European call or put option.  To accomplish this, the calculator uses the current share price of a stock, along with the option strike price, time to expiration, risk-free interest, and volatility.

•    Return on Investment Calculator – One of the more popular calculators, this one would determine return on investment, whether gain or loss on an investment, which includes the return on investment being annualized.

•    Present Value Calculator – For the value of an investment according to current rate, this is the calculator to use.

•    Future Value Calculator – To determine the future value of an investment, this tool helps calculate investments for a future date.

•    Time Value of Money Calculator – To see the effect on cash flow that an investment opportunity would have, this calculator is great.

•    Profitability Index Calculator – If you want to see the benefit to cost ratio of an investment, this calculator would help determine present value of cash flows.

•    Short-Term Investment Calculator – This calculator figures out the amount of money needed today to buy an asset or pay an expense at a future date.