Calculator - monthly amount invested, increasing annually.

[trueza7]

I am looking for an online calculator that can help me with this calculation:

Person invests monthly amount X, monthly into an investment earning annual interest i.
Annually, the contributed amount X increases by a percentage, say p% = X+p%

How do I work out what this amount will be in y amount of years?

 

[Nerfherder]

Its called compound interest.

Just search for a calc that does compound interest

 

[Nerfherder]

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

 

[trueza7]

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Thanks Nerfherder, I did find that calculator, and while it is mostly useful, it doesn't account for an annual increase. Rather it accounts only for a set annual addition.

What I am trying to do is figure out the pro's and con's of life cover - trying to estimate the potential difference in taking out life cover vs. investing in a moderate risk investment.

Thanks again, will keep looking.

 

[HavocXphere]

Amort functions don't cover annual increases. You'll need to calculate it by hand. Here is a demo spreadsheet I made to demonstrate how:

https://docs.google.com/spreadsheet/ccc?key=0Apc0e54xyXpMdHBxR0hJVFNkY2kyVDB2bVZmQ2dSdUE&hl=en_US

Its read only, so you'll need to download it to put in your info.

Also, this is a 5 minute job so there is a siginifiant chance of errors in my formulas. If someone finds any pls PM.

 

[gu3st]

Thanks Nerfherder, I did find that calculator, and while it is mostly useful, it doesn't account for an annual increase. Rather it accounts only for a set annual addition.

What I am trying to do is figure out the pro's and con's of life cover - trying to estimate the potential difference in taking out life cover vs. investing in a moderate risk investment.

Thanks again, will keep looking.

The obvious difference is that if you take out R1m cover and die in 2 months, your family gets the full R1m, whereas if you invested the premiums, your family would get virtually nothing.

This is the whole purpose of insurance. It's silly and short-sighted to compare insurance with savings, unless you take up a policy that combines the two (endowment assurance, for example).

 

[trueza7]

The obvious difference is that if you take out R1m cover and die in 2 months, your family gets the full R1m, whereas if you invested the premiums, your family would get virtually nothing.

This is the whole purpose of insurance. It's silly and short-sighted to compare insurance with savings, unless you take up a policy that combines the two (endowment assurance, for example).

Agreed. I am not necessarily saying that I want one or the other, but I was interested to see at what point a monthly investment becomes a "better option" when compared to life insurance. Obviously yes, if one dies early then your investment won't be as high, but it would seem that within 20 years a life insurance policy becomes equal to a moderate-low investment of the same amount (premium). Perhaps even earlier depending on market conditions and the type of investment.

The fact is, life insurance companies are making lots of money, they have actuaries and analysts who make sure this is the case. I was just trying to see for myself how they make this money, etc. Endowment assurance would seem a good idea, though I would have to see a quote and fine details.

Possibly, one could take out mortgage insurance (after buying a substantial property) and let this act as the "life cover". Not sure of the cost difference but this is probably something I would do.

 

[trueza7]

Amort functions don't cover annual increases. You'll need to calculate it by hand. Here is a demo spreadsheet I made to demonstrate how:

https://docs.google.com/spreadsheet/ccc?key=0Apc0e54xyXpMdHBxR0hJVFNkY2kyVDB2bVZmQ2dSdUE&hl=en_US

Its read only, so you'll need to download it to put in your info.

Also, this is a 5 minute job so there is a siginifiant chance of errors in my formulas. If someone finds any pls PM.

Wow, thanks for the spreadsheet - it does seem to work. Appreciate your help.

 

[HavocXphere]

Wow, thanks for the spreadsheet - it does seem to work. Appreciate your help.

Glad you like it. Just remember its not very flexible so just changing say the years number by itself won't work...you'd need to adapt the table too (e.g. add a field for 21st year).