Kolkata, December 3: When making financial decisions, one often has to do calculations. For example, you may want to know your EMI amount and how much you your SIPs will return. While one can always use pen and paper for calculation or an excel sheet, there are several online calculators available, which can help you make these calculations in an instant. We look at two most common financial calculators that you should use.
EMI calculator: When you take any loan, whether it is a home loan, a car loan or a personal loan, it is very important to have an idea of the EMIs. This is because you need to know how much EMI you can afford to pay without paying a strain on your finances. Banks will have EMI calculators on their website. All you need to do is to enter the loan amount, the loan tenure and the applicable interest rate and the calculator will display the EMI and the total interest you need to pay. Remember that to decrease your EMI, you can either decrease the loan amount or choose a longer tenure if the rate of interest is fixed. However, a longer tenure would also mean that you end up paying a higher interest. Let us say you have a car loan of Rs 5 lakh. The rate of interest on your loan is 9.5 per cent. Your EMI works out to be Rs 16,016 and the interest you pay is Rs 76,593. If you increase the loan tenure to 5 years the EMI comes down to Rs 10,501. However, the interest payable is now Rs 1,30,065. There are loan specific EMI calculators on the bank websites that you can use too, to calculate your EMI.
SIP calculator: SIPs are the preferred mode of investment in mutual funds for most people. When investing for a long term goal like retirement or children’s education, investing in SIPs is often a route many of us follow. A SIP calculator can help you find out how much money you need to invest in SIPs every month for a certain goal. You need to know the amount of the goal and also assume a rate of return on your investments. Let us assume that your goal is to have an amount of Rs 15 lakh in 8 years. Assuming that your returns in mutual funds give you returns of 12 per cent per annum, you would need to invest Rs 9,379 every month. In case you have 10 years to save for the same goal, your monthly SIP amount works out to be Rs 6,521. This goes to show that starting to invest early always helps.
You can also use a different SIP calculator to calculate how much your SIP investments will be worth after a certain period of time. For example, if you invest Rs 10,000 every month for 10 years at a rate of 12 per cent, your corpus will be Rs 23,23,391 after 10 years. However, remember that when using SIP calculators, you need to factor in inflation. If a certain goal is worth Rs 10 lakh now, it will be worth a lot more, 10 years later. Similarly, the value of a certain corpus will be worth much less in 10 years compared to what it is now.