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What is a wealth calculator?
A wealth calculator is a tool designed to help individuals plan their financial futures by calculating how much money they need to achieve their financial goals. It takes into account factors such as income, expenses, savings, and investments to provide a clear picture of one's financial situation. This tool is crucial in financial planning as it allows users to set realistic financial goals and track their progress towards achieving them. Whether you're saving for retirement, buying a home, or planning for your children's education, a wealth calculator or a net worth calculator can provide valuable insights to help you make informed financial decisions.
A net worth calculator is useful when you want to get a quick snapshot of your current financial health. It calculates the difference between your assets and liabilities, giving you a clearer idea of financials. While a wealth calculator focuses on future planning, a net worth calculator gives you an overview of your present financial situation, helping you make better decisions for tomorrow.
How does the wealth planning calculator work?
A wealth calculator computes your monthly SIP contributions needed to reach your financial targets. The wealth calculator functions by using a straightforward formula for wealth creation:
Investment Value = Principal × (1+Rate of Return) ^Investment Tenure
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Investment Value: This is the wealth you aim to accumulate for goals like education or retirement, adjusted for inflation to maintain purchasing power.
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Return: It's the growth or income expected from investments like equity or debt mutual funds, chosen based on risk and investment duration.
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Investment Tenure: This is how long you plan to invest to achieve your goals, benefiting from compounding over time. It is advisable to revisit a wealth calculator and net worth calculator regularly to stay aligned with your financial goals.
Start investing in mutual funds through SIPs today to secure your financial future effectively.
How does the wealth calculator help in retirement planning?
Using a wealth calculator can simplify retirement planning by providing a clear, data-driven roadmap for financial stability. Pairing it with a net worth calculator helps ensure your current financial base supports your future plans.
- Estimates future wealth – Calculates how much your investments can grow over time based on returns, inflation, and contributions.
- Retirement goal setting – Helps determine the amount needed for a comfortable retirement.
- Investment planning – Suggests how much to invest regularly to reach your retirement target.
- Inflation adjustment – Factors in rising costs to ensure realistic future projections.
- Scenario analysis – Allows you to compare different saving and investment strategies.
- Early action encouragement – Shows the benefits of starting early to optimize compounding.
All financial calculators by Bajaj Finserv AMC
Steps to use Bajaj Finserv AMC Wealth Calculator
Step 1: Calculate your wealth goal
Determine the amount of wealth you want to create and specify the number of years in which you aim to achieve this goal.
Step 2: Enter expected rate of return
Input your expected rate of return on investments, considering historical performance and future expectations.
Step 3: Monthly SIP calculation
Based on your inputs, our wealth calculator computes the monthly Systematic Investment Plan (SIP) required to reach your financial target.
Benefits of online wealth calculator
Clarity in financial goals
Wealth calculator helps individuals set clear and achievable financial objectives by assessing their current financial status and future aspirations.
Track progress
Users can monitor their financial journey over time, allowing for adjustments and improvements as necessary.
Informed decisions
It enables users to make well-informed decisions regarding savings and investments by projecting outcomes based on different scenarios.
Financial awareness
By using a wealth calculator, individuals gain insight into their financial strengths and areas needing improvement, empowering them to take proactive steps toward financial well-being.
What should one keep in mind while using the wealth calculator?
Accuracy of inputs
Enter precise financial data to ensure the wealth calculator provides reliable results for planning.
Regular updates
Keep financial information current to reflect changes in income, expenses, savings, and investments accurately over time.
Realistic assumptions
Use cautious estimates for income growth and investment returns to maintain realistic expectations and plans
Seek professional advice
Consulting a financial advisor offers personalized insights and guidance to optimize financial strategies and decisions based on individual circumstances.
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Frequently Asked Questions
Wealth calculators are beneficial for anyone interested in understanding their financial position and planning for the future.
The accuracy depends on the completeness and accuracy of the financial information entered.
Investors can use wealth calculators at any stage to assess their financial health and plan accordingly.
A wealth calculator provides insights into your current financial situation and helps in setting achievable financial goals.
Using a wealth planner allows for systematic financial planning and helps in achieving financial goals efficiently.
Wealth creation through mutual funds involves investing in diversified funds, staying invested for the long term, reinvesting returns, and benefiting from market growth and compounding.
Key factors include selecting a suitable fund based on risk appetite, investment horizon, expense ratio, fund performance, diversification, and staying invested for the long term.
SIPs enable disciplined investing, reduce market timing risk, harness the power of compounding, and average out purchase costs through regular contributions.
A wealth creation calculator estimates future returns based on investment amount, tenure, and expected returns, helping investors set realistic financial goals.
Typically, wealth creation requires a long-term horizon of 5-15 years or more, allowing investments to grow and compound effectively.
Risks include market volatility, interest rate fluctuations, inflation impact, fund manager performance, and liquidity constraints in certain funds. Diversification and a long-term approach can help mitigate these risks.
Disclaimer: The calculator alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. This tool is created to explain basic financial /investment related concepts to investors. The tool is created for helping the investor take an informed decision and is not an investment process in itself. Mutual Fund does not provide guaranteed returns. Investors are advised to seek professional advice from financial, tax and legal advisor before investing.