Investment Calculator

Investing involves purchasing assets with the expectation that they will generate income or appreciate in value over time. Key principles include diversification (spreading investments across different asset classes), the risk-return relationship (higher potential returns typically come with higher risk), and the power of compound growth (earnings generate their own earnings over time). Understanding your risk tolerance, investment timeline, and financial goals is essential before investing.

Compound interest is often called the 'eighth wonder of the world' because it allows your investments to grow exponentially over time. When you earn returns on your investments, those returns are reinvested to generate their own returns. The earlier you start investing, the more time compound interest has to work. Even small amounts invested regularly can grow significantly over decades due to this compounding effect.

Your investment strategy should align with your time horizon and goals. Short-term goals (less than 5 years) typically require conservative, low-risk investments like savings accounts or bonds. Medium-term goals (5-10 years) might use a balanced approach with both stocks and bonds. Long-term goals (10+ years) can often accommodate more growth-oriented investments like stock index funds, which historically provide higher returns but with more volatility.