A financial calculator is a current digital tool that helps investors plan their future goals with ease in a systematic way. Individuals avoid investment as they find it a challenge to know exactly where and how much to invest. Today, with unpredictability around the corner, not to mention rising costs, it helps to have a near-accurate way to plan your finances. Nonetheless, as much as there are pros to using them, there are some disadvantages too.
The Pros of Financial Calculators
In the present day and age, there are many instruments that serve the purpose of unique investment requirements of different investors. A financial calculator can be useful in planning your investments and selecting from a range of avenues. You may want to open a demat account and invest a portion of your capital in stocks, leaving a portion of capital investment in a less risky instrument like a fixed deposit. It helps to go into investment in a planned manner, and here is how an investment calculator can help you:
- Good Estimates - Online calculators can be used for a myriad of financial planning goals, from retirement to life’s milestones like a child’s education or even a holiday. You can not only gauge returns from a range of financial instruments like when you use a SIP calculator for a SIP, to estimate returns from a retirement fund.
- Easy to Start Investing - For those investors who wish to invest but are apprehensive to try, online financial calculators offer a way to begin investments with calculated risks. Simple return on investment calculators can even predict, to some extent, your investment in an upcoming IPO, considering the company whose IPO you invest in, its growth prospects, and other data. These may not offer you sure-shot return outcomes, but if you have a rough idea about any aspects of investments, you may be more compelled to have a go at them, rather than sit tight. In the future, this may yield good returns for you.
- All Solutions in One Spot - Online calculators give you several financial solutions in one place. For instance, you can make simple calculations of returns you may acquire in a fixed deposit, to more complex computations of tax implications with your investment.
- Savings of Time and Effort - Financial calculators can make your life easy when it comes to quick calculations regarding any investment you may wish to make. You can access these on most portals of good brokerages and financial companies, not to mention banks. Any financial calculator you use today is a user-friendly tool that helps you plan your investment.
Are there any cons to using financial calculators?
A SIP calculator can steer you in the right direction of which SIP to select for investment, but some calculators may just throw you off the beaten track. There are a few areas in which online calculators may prove to be a bane, but these are few and far between:
- Some calculators may not have the correct algorithms to project returns in a near-precise manner.
- An error in entering data can lead you off track with your planning, leading to mistakes in investment planning.
- Seniors may find certain calculators challenging to use.
- Assumptions about return rates may not always be good indicators for any financial portfolio.
Whether you open a demat account today and make plans to invest in stocks or seek a prospective upcoming IPO to get you on the path to investment, you must base your investment on sufficient data and information, not just financial calculators. It is true that calculators provide you with predictive numbers, but technology cannot prevent certain future events that may influence investment.
Related Blogs: 5 reasons for the sharp growth in SIPs in India | Tax implications on a Mutual Fund and SIPs | SIP and the power of compounding | If you're investing in SIP, make Mutual Funds SIP calculator your best friend