Investment Calculators
Step-by-step guides for understanding and applying the key calculations behind investment decision-making.
Compound Interest Explained
Compound interest is described as the eighth wonder of the world for good reason — it turns small, consistent contributions into substantial wealth given enough time. Yet many people have never seen the formula or worked through a real example. This guide fixes that.
We break down the compound interest formula, explain the role of each variable, and walk through scenarios showing how starting five years earlier can result in dramatically different outcomes — even with identical monthly contributions.
- The compound interest formula with every variable explained
- Annual vs. monthly vs. daily compounding — real-world difference
- Step-by-step worked examples at different contribution levels
- How inflation interacts with compounding returns
- Common misconceptions about compounding debunked
Return on Investment (ROI) Methods
ROI sounds simple — divide gain by cost and multiply by 100. But in practice, there are at least four common ways to calculate it, and choosing the wrong one can lead to very misleading conclusions. This guide covers the main ROI calculation methods and explains which to use in which context.
We cover basic ROI, annualised ROI, adjusted ROI (which accounts for holding period), and how to factor in opportunity cost when comparing two investments.
- Four ROI calculation methods side by side
- Annualised ROI formula and worked examples
- How to account for fees, taxes, and transaction costs
- Comparing investments across different time horizons
- Benchmarking ROI against inflation and risk-free rates
The Time Value of Money
A fundamental principle of finance: money today is worth more than the same amount in the future. Understanding why — and knowing how to quantify that difference — underpins almost every rational financial decision, from mortgages to pension planning to lump-sum vs. instalment choices.
This guide explains present value and future value, introduces the discount rate concept, and shows how TVM calculations can help you evaluate real decisions with greater confidence.
- Present value and future value formulas explained clearly
- How discount rates work and how to choose an appropriate rate
- Lump sum vs. annuity payment comparisons
- Net present value (NPV) introduction for evaluating projects
- Applications to mortgages, pensions, and insurance products
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