Savings Interest Rate Calculator

2007-10-22 12:23:00

( Financial )



Many Choices in Investments

If you are someone who has money to spare after each paycheck, you have a lot of choices. There are short-term investments which allow you to make withdrawals at certain periods, such as stocks, money market and time deposit accounts. There are also longer-term types like treasury bonds and pension funds.

The yield that you will expect is dependent on several factors, such as the risk level, the amount of investment, length of investment, and the offered rate. What makes it more complicated is that these terms vary by financial institution. Moreover, the actual yield is also tedious to compute, since the interest is compounded.

How to Use a Savings Interest Rate Calculator

Fortunately, you can use built-in savings interest rate calculators when you access the web. These calculators are readily available at websites of financial institutions, and also at independent sites.

You can also choose what type of calculator you want to use, since some sites also feature built-in mortgage rate calculators.

Upon accessing the saving interest rate calculator, you will see several blank fields. Each field represents one component of the financial terms - the initial invested amount, interest rate, monthly deposits or savings you will make, and the investment period in years. You need to fill in each of these fields in order to arrive at the final yield.

The final results show the total yield, broken down into amount invested and the interest earnings.

Advantages of Using a Savings Interest Rate Calculator

You can change the amounts in any of the fields, until you come up with a desired level of yield. Even if you use it on a trial-and-error basis, the calculator will still be able to compute the yields much faster than if you were to compute it manually.

The savings interest rate calculator helps you make important decisions concerning your investment. You can even use the calculator to compare between two or more investment offerings, and you will be able to arrive at your financial decision faster.

You will know exactly the minimum amount of funds you need to set aside each month so that you will maintain the yield level.

You can also use the calculator as a benchmark when you go shopping for the financial institution where you will place your savings.

Other Considerations

Interest rates are also subject to fluctuations caused by economic trends. Unless you have a fixed rate investment where the interest rate has been locked for the next few years, you cannot rely on the calculator as the sole factor for your decision. Bank deposit accounts also have lower yields than other types of instruments, so you may be missing out on more lucrative ways to make your money grow.

Ideally, you should invest in a mixture of both short-term and long-term instruments. You may also want to allocate part of your savings to buy life insurance protection for yourself and your loved ones, as well as buy real property.


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