Financial Goals Calculator
Financial Goals Calculator
An individual may have several financial goals in life like buying a house or a dream car, going to foreign country for vacation, get higher education, etc. These goals can be short-term, medium-term or even long-term.
Depending on the tenure of your goal, the investment class can be determined which is a crucial part of goal-based investing.
When the goal is close to maturity, a Financial Planner would recommend investing in debt or fixed income assets as the market volatility is not a favorable choice in short-term. On the opposite, if the tenure of your goal is long-term, the investment class may have market risk exposure.
Using the Financial Goal Calculator, you can easily understand the amount that would be required in achieving a goal over a given period of time adjusted to inflation through SIP investing.
How does the Financial Goal Calculator work?
In order to use the Financial Goal Calculator, one should know the following terms:
Cost of Goals as of today is the amount that you would require to achieve a goal at its current cost.
An individual may have several investments for different goals in his life, these goals may have not be planned with any Professional help but can be of importance to an individual. Hence, while determining the existing investments for a specific goal to be planned, you can allocate some of your existing investments or simply state Rs. 0 (since the existing investments are not allocated to the goal you are planning for)
These are the expected returns that you would generate on the existing investments allocated to a specific goal in the given time period.
Inflation Rate is the rate at which the price of goods and services are rising per annum.
Tenure for the goal is the time left from today for the goal to mature.
Expected Rate of Returns is the returns you are expected to earn on the SIP investments you start today towards the goal.
Cost of Goal at maturity is the inflated amount you would need to achieve the goal at maturity.
Maturity Value of Existing Investments is the total amount you would have from existing investments, it is a sum of initial investment and returns on it.
Amount Remaining for the goal is the difference of your maturity value of existing investments and cost of goal at maturity, this is the amount that is targeted for achieving using SIP.
Formulas:
A = PV(1 + r/n)n
FV = P [ (1+i)^t-1 ] * (1+i)/i
Example:
If you want to buy a dream car that cost Rs. 10 lakhs today in the next 3 years and you have a savings of Rs 2 lakhs which would yield 6% per annum while inflation is at 7%, the amount you would be required to invest in a monthly SIP that yields 10% would be: Rs. 23423.68
Why should you use a Financial Goal Calculator online?
Using the Financial Goal Calculator online helps you in making a financial decision on how much to invest on a monthly basis today for achieving the financial goal? on a real-time basis. Thus, helping you make a proper financial plan.
Advantages of using a Financial Goal Calculator:
Listed below are few advantages of using a Financial Goal Planning Calculator:
The Financial Goal Planning Calculator helps you in calculating the SIP amount you should be investing towards your financial goal irrespective of the currency denomination, that is, you can use it for calculation in INR, USD, JPY, EUR or any currency of your choice.
Financial Goal Calculator helps you in making financial decisions quickly that is because you can compare the various financial opportunities on different parameters like Inflation, Tenure, Expected Rate of Return, etc on a real time basis.
Financial Goal Calculator does all the mathematics functions online with few inputs on your end. No coding or doing the maths is needed, this makes it easy to operate.
You can calculate the inflated cost of your goal over the years and monthly SIP amount required to achieve the goal. Also, you can compare different financial assets where you can invest to reduce the SIP required per month based on its expected returns and risk. This helps in making a perfect financial decision.