About this Investment Calculator
This investment calculator aims to help you estimate the potential
growth of your investments. You can visualize your financial future and
make informed decisions so you can meet your goal confidently with a
solid plan.
What is Investing?
Investing is the act of allocating money into assets or ventures with
the expectation of earning a profit or return over time. Investors can
choose various financial instruments, such as stocks, index funds,
bonds, and more, each with its own risk and return potential.
Common Financial Assets
Nowadays, there are a wide array of financial assets to choose from,
each with different risks and returns profile. Understanding these
options is key to building a successful investment strategy:
1. Stocks: Stocks represent ownership in a company, and buying
them allows you to become a shareholder. Stocks can offer high returns,
especially if the company grows and performs well, but they also come
with high volatility and risk. Investors should carefully research
companies and diversify their stock investments to mitigate potential
losses.
2. Index Funds: Index funds are investment funds that aim to
replicate the performance of a specific market index, such as the S&P
500. These funds are typically low-cost and provide diversification
since they include multiple stocks from various sectors. They are a
popular choice for investors seeking long-term growth without the need
for constant portfolio management.
3. Exchange-Traded Funds (ETFs): ETFs are similar to index funds
but trade like individual stocks on exchanges. They offer flexibility,
as investors can buy and sell shares throughout the trading day. ETFs
provide diversification and often have lower fees compared to mutual
funds, making them a suitable option for both novice and seasoned
investors.
How to use this Investment calculator?
In the investment journey, having a tool that can help you visualize
your goal clearly and work toward your financial goal with more clarity
is invaluable. Portseido's Free Online Investment Calculator is a tool
that empowers you to plan and grow your investments.
Understanding the Inputs:
1. Time Horizon (Years):
This is the duration over which you plan to invest. Input the desired
number of years.
2. Initial Investment:
Enter the starting amount to invest. This provides the baseline for your
future projections.
3. Expected Annual Return:
Specify the anticipated annual return on your investments. This figure
helps the calculator estimate the growth of your portfolio over time.
4. Additional Investment:
Input any additional funds you plan to contribute regularly. You can
choose the frequency, whether monthly or annually, depending on your
financial habits.
5. Additional Investment Growth (Percent and Frequency):
Define the growth rate for your additional contributions. This feature
allows you to account for salary increases, bonuses, or other financial
increments. Choose whether this growth occurs year over year or month
over month.
Executing the Calculation:
Once you've entered all the necessary information, click on the
"Calculate" button. The DCA Calculator will process your inputs and
generate a outputs to guide your financial planning.
Understanding the Outputs:
1. Final Result:
The calculator will display the projected final amount. This represents
the target amount you aim to achieve within the specified time horizon.
2. Portfolio Projection Graph:
Visualize your portfolio's projected growth over time with an
easy-to-understand graph. This graphical representation provides a quick
overview of your financial trajectory.
3. Portfolio Projection Table:
Explore a detailed table that breaks down your portfolio progression
over the specified time horizon. The table includes multiple tabs for
"Value," "Contribution," and "Return," allowing you to analyze each
aspect of your financial plan.
Example:
You invest in an S&P 500 index fund, which has historically provided an
average annual return of around 10%. You start with an initial
investment of $10,000 and plan to contribute $1,000 per month. To
maximize your growth potential, you also plan to increase your monthly
contributions by 5% each year for the next 20 years.
Your inputs for your index fund investment plan to the calculator
- Time Horizon: 20 years
- Initial Investment: $10,000
- Expected Annual Return: 10%
- Additional Investment: $1,000 Monthly
- Additional Investment Growth: 5% Year over Year