Limitations of Financial Calculators

Limitations of Financial Calculators

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Internet calculators have served their purpose well, but as consumer spending has changed so should the function of these calculators. We take a look at the latest financial calculator that can help map your spendings.

Internet Calculators have certainly served their purpose well, especially in the past with calculating mortgages and loans. However, they can often be limited in their use in being unable to account the rise of inflation or varying interest rates. It hasn’t been until recently that a niche in Australian financial calculations has been created. Plencore Online Pty Ltd introduces Financial Mappers.

Financial Mappers is one giant dynamic calculator which lets you enter and keep anything related to your personal finance and project results over a thirty year period. The calculator is so large, because of all the entries are interrelated so that as you make an entry in one section, the effect ripples through the whole plan. Once the data has been entered you can then use the modelling tools to manipulate the answers and build, ‘what if’ scenarios. Finally, there are numerous, simple to read reports which can be extracted using the data you have entered.

The best way to understand the Financial Mappers calculator in comparison to standard Internet Calculators is by comparing the two in a similar scenario.

Internet Calculator

Let’s take a look at an Internet Calculator. If you are earning $100,000 and depositing $12,000 of that a year (12%), an Internet Calculator will tell you that the estimated value at the end of a 30 year period at a 5% interest rate will be $797,266. This is a high return, however Internet calculators do not take into account rising incomes, tax on investments, inflation, and normally don’t allow you to change how much you want to save from year to year.

Financial Mapper

A Financial Mappers calculator will take into account your income and can be set to increase your salary at the rate of inflation (2.75%). Like the last scenario, assuming a $12,000 yearly deposit and a 5% interest rate. We will find that the future value will be $907,273, which in real terms sounds like a lot, however if we were to compare this to the present value it would only be around $402,053. Financial Mappers, therefore, is more relevant for you because it takes into account a broader range of variables and scenarios.

If you are currently using an Internet Calculator and not entirely happy with your results, then we encourage you to try the Financial Mapper’s calculator. Gear yourself in the right direction today –  Find out more!

 

Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.

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