Many people have started investing and planning a good savings for their future. Monthly Investment scheme seems to be very popular among all and especially among the new age income earners as it is quite reasonable. And if you are not sure about this I will show you the calculation as to how much your monthly investment will fetch you more income after a certain period.
You need to invest a fixed monthly amount eg: Rs.1000. There are various schemes available with different amount and different rate of interest and period. If you want to choose which scheme will fetch you more returns with the given information then do the following calculation.
Example:
You invest Rs.1000 per month
You will get returns at 8% compounded MONTHLY
You are depositing for 9 years
Calculation:
A = Rs.1000 per month
Rate of interest monthly = 8/12 months = 0.667% = 0.667/100 = 0.00667
N (period) = 9 * 12 months = 108 months
Formula: A*(1+r) *( (1+r)n -1)/ r
= 1000*(1+0.00667) * ((1+0.00667)108 -1)/ 0.00667
= Rs.158479
So investing Rs.1000 per month at the rate of 8% per annum compounded monthly you will get Rs. 158,479/- at the end of 9 years
D.V.P
For non-finance student who simply want to calculate without the formula download the below excel link and click Enable Editing and simply calculate entering your details
https://docs.google.com/spreadsheet/pub?key=0AlC7HnnNgD3KdG9LZnpQcjlzZWY1QnZRQWVsb3N0clE&output=xls
FinancialDoodle 