Planning on saving for the future? Great. Choosing to use a savings account calculator will be one wisest choices you make. To take the mystery out of how much money you stand to gain by placing a particular amount of money in interest bearing savings or in an investment plan, you can use one of the many available savings calculators which take into consideration lots of different factors and give you a look at your future potential earnings. They can help you determine your planned, present or future earnings, allowing you to customize for your personal financial situation and goals.
First of all you will need to enter details into the calculator of how much money your initial investment will be and any extra payments which you intend to add to the starting balance over a period of time at regular intervals. When calculating the final sum of money to be earned, the savings account calculators offering the option of additional contributions will assume the extra payments are to be added at the start of the period stated.
The next step is to define the amount of time you intend the investment to run, earning you interest in the account, and enter this into the savings account calculator.
Each savings account or investment opportunity has a certain annual rate of return and this should be the next piece of information you detail into the equation. Stated as the APY (Annual Percentage Yield) this is what directly affects your earnings. You will find that the APY will differ from institution to institution so make sure to pay special attention to this.
Another factor and very important one, which you may include in a savings account calculator is the compounding of earnings. Compounding means the further earnings made on the interest already accrued on the investment. This reflects the power of compounding. With compound interest, you earn interest on the money you save and on the interest that money earns. Over time, even a small amount saved can add up to big money. Being aware of the rate of compounding when using a savings account calculator will assist in accurately predicting just how much interest will be made over any given time span.
Depending on the type of savings or investment you choose the variables may change but a calculator specifically for savings will allow you to input variables and give you a good look at your future earnings. Now, online you can compare the different savings and investment products with the click of a mouse. When you need to make a comparison of rates being offered by different institutions of finance, in order to achieve the maximum benefits for your contributions, a savings account calculator is an invaluable and easy to use tool.