Investing is the act of using money to make more money. The Investment Calculator can help determine one of many different variables concerning investments with a fixed rate of return.

Variables involved

Return rate – For many investors, this is what matters most. On the surface, it appears as a plain percentage, but it is the cold, hard number used to compare the attractiveness of various sorts of financial investments.

Starting amount – Sometimes called the principal, this is the amount apparent at the inception of the investment. In practical investing terms, it can be a large amount saved up for a home, an inheritance, or the purchase price of a quantity of gold.

End amount – The desired amount at the end of the life of the investment.

Investment length – The length of the life of the investment. Generally, the longer the investment, the riskier it becomes due to the unforeseeable future. Normally, the more periods involved in an investment, the more compounding of return is accrued and the greater the rewards.

Additional contribution – Commonly referred to as annuity payment in financial jargon, investments can be made without them. However, any additional contributions during the life of an investment will result in a more accrued return and a higher end value.

Different Types of Investments

Our Investment Calculator can be used for almost any investment opportunity that can be simplified to the variables above.

CDs

A simple example of a type of investment that can be used with the calculator is a certificate of deposit, or CD, which is available at most banks. A CD is a low-risk investment. In the U.S., most banks are insured by Federal Deposit Insurance Corporation (FDIC). It pays a fixed interest rate for a specified amount of time.

Bonds

Risk is a key factor when making bond investments. Buying the bonds of companies rated at a risky level will earn a relatively high rate of interest, but there is always a risk that these companies might go out of business. One very special kind of bond is the United States Treasury inflation-protected securities, known as TIPS, which handle the risk of inflation.

Stocks

Equity or stocks are popular forms of investments. A stock is a share, literally a percentage of ownership, in a company. It permits a partial owner of a public company to share in its profits through dividends. Most stocks are traded on exchanges like the S&P 500.

Real Estate

A popular form of investment in real estate is to buy houses or apartments to “flip” or rent out. Land can also be bought and made more valuable through improvements. Passive forms include Real Estate Investment Trusts (REITs).

Commodities

These range from precious metals like gold and silver to useful commodities like oil and gas. Investment in gold is complex, as its price is determined by finite resource value rather than industrial usage. Oil and gas are typically traded through futures exchanges.