“Research has shown that people who use these calculators save more money than people who don’t.” – Making the Most of Your Money Now by Jane Bryant Quinn
The power of a savings/investing calculator may lie partly in the fact that it is in your hands (literally), and therefore in your control. For most people, this may be the first time they felt any sort of control over their financial future. There are very few people that escape the amazement of seeing hundreds of thousand of dollars appear in the answer for the first time, after they enter various figures based on their particular situation and financial plans. Watching the numbers unfold can make you acutely aware of the difference starting early makes to the final balance. The advice of a financial adviser may still be needed, but at least you can go there with a little more confidence, knowing what needs to be done.
There are several lessons that a hands-on financial calculator is very good at teaching. Without a doubt the most important lesson you learn is the benefit of starting early. You can’t help but ‘play’ with a savings calculator, and the results of changing various values in the text boxes can be a real eye opener. Changing the number of years an investment has to grow (until your goal date), from starting today to waiting 20 years down the road, can cost you hundreds of thousands of dollars. If a savings calculator can give you the motivational boost you need to start investing early, you will be in a better position to ride the ups and downs of the stock market, as well have sufficient time to recover from any mistakes.
These types of investing calculators can help take the fear out of getting started. Two thirds of people in the United States don’t understand basic financial concepts like compound interest, and while a savings calculator may not be what some would consider a financial education tool, it does give people a hands-on life lesson on how every one of the values that you enter, affects the outcome of the others.
The new DNotesEDU Financial Calculator , available for use on their website, is a multi-function 5-in-1 savings/investment calculator that allows you to solve for any one of the five variables. It has the five needed functions necessary to get an estimate (before tax and inflation) of various financial scenarios, thus allowing you to see what kind of difference an increase or decrease in interest, monthly payment, initial balance, or years to maturity can make to the outcome. Alternatively you could work backwards with a specific future value in mind, and then figure out the interest rate required, additional deposits, etc. Some calculators require you to enter things like your after-tax rate of return and the rate of inflation, and while these are important and necessary for precise calculations, it can over complicate a straight forward savings calculator for the novice investor. Every other online savings calculator I have seen solves only one function, which puts the DNotesEDU 5-in-1 Financial Calculator ahead of the game.