Most people have a calculator on their smartphone that can add, subtract, multiply and divide. But you need a financial calculator (or financial calculator app) to figure out how much interest you can expect from your bank CD over time, or how your mortgage payment would change with various interest rates.
Perhaps you’ve found yourself Googling for an online financial calculator to find the answer to a personal finance question… but the functionality is limited. Or maybe you’ve learned how to use a Texas Instruments or HP financial calculator… but you’d love something simpler. If so, the free financial calculator app we share today will help you make smarter financial decisions with ease!
My husband, Todd Langford, develops financial calculators that create clarity around personal finance decisions. The Truth Concepts software is a suite of tools and calculators that helps advisors compare various financial strategies—such as different investments, loans, rental properties, or tax strategies. Truth Concepts can do complex work, such as calculating the internal rate of return of a whole life policy or comparing different types of investments with unequal cash flows. We use and love the Truth Concepts financial calculators, however, the learning curve and investment is a bit much for the layperson. Fortunately, now there is a user-friendly app that puts calculating power right at your fingertips!
The app is “TC Financial Calculators” and you can find it by either entering that title into the app search bar or using the links at the end of this article. A huge advantage of the app is that you can use it on the go and you’ll have easy access to it on your smartphone. You’ll have it when you’re buying a car, looking at loan options, or making other big financial decisions. It may be the best financial calculator app available… and did we mention it’s free?
Now, let’s see what it does and just a few of the ways you can use it!
Using the TC Financial Calculator App
It’s actually “five calculators in one” as you can solve an equation for various factors. The app includes financial calculators for:
- Present Value
- Future Value
- Time Periods
- and Interest Rates.
Let’s break down some of these calculators and give you a taste of what’s possible.
Basic Functions: How it works
The five calculators work and function as a unit. If you open up any of the calculators, such as Present Value, you’ll notice at the bottom that there are four tabs for Calc 1-Calc 4. These tabs will allow you to make side-by-side comparisons of your data. And not only does the information stay saved within that calculator (until cleared), but when you open another calculator, the information from each tab carries over. That means you can input some data into Present Value, hop over to Payments, and your variables will still be filled out.
Unlike a simple handheld calculator, the variables never disappear. The logic becomes easy to follow, even if you’re not a financial professional. Once you begin to really understand how it works, you’ll wonder how you ever went without it!
Rate Calculator: What’s the earnings rate?
Let’s take a closer look at just one way you could use the calculators. We’ll start with the Rate calculator, which is a great tool for determining what rate you would have to achieve in order to reach a desired financial outcome.
Say you have an account with $100,000 and you are adding $10,000 in a lump sum every year. You can input $100,000 into “Present Value” (what you already have), and $10,000 into “Periodic Deposit” (what you will deposit). Then, tap “Beginning” and scroll to “Annual” in the menu at the bottom of the screen. This indicates that you will be making deposits at the beginning of each year, once a year. (You can also indicate something different, such as a sum deposited every month.)
In ten years, if you want to have $1,000,000. Input that value into “Future Value,” and put 10 into “Num of Periods.” (Note: pay close attention to this, as the number of periods will vary depending on the frequency of payments: i.e. 10 periods for annual payments, 120 periods for monthly payments, etc.)
You get this result:
You would have to earn 20.96% on your account in order to have $1 million in ten years. You’ll notice that there are two numbers provided for the answer. The top figure is rounded up, while the bottom figure is the full answer. Hit “copy” to grab the longer (and more accurate) decimal.
If you navigate back to the Present Value calculator, you’ll notice that the data is stored in the “Calc 1” file, so you don’t need to start from scratch. The interest rate, however, will not be filled out. Since you copied the rate beforehand, simply paste the interest rate in, and everything will check out. If you merely input the rounded interest rate, your answer will be about $32 off the mark. Maintain accuracy by using the copy function.
When the interest rate is copied and pasted, the results are correct. If you just type in the rounded answer, you risk a number that’s a little “off.”
Periods: How long will it take?
Maybe you ran the example above and realized that aiming for a nearly 21 percent interest rate is not realistic. You look at your portfolio and feel more confident in being able to earn 6 or 7 percent per year, but not double digits. At your current income, deposit rate, that goal of a million dollars will likely take a lot longer than 10 years.
Using the Periods calculator, you can calculate how many years it will take at the same present value ($100,000) and annual deposit ($10,000). As you can see, the (rounded-off answer) is 22.42 years:
Future Value: What will an investment be worth?
Let’s say you can obtain a consistent or contractually assured return of 6 percent on your money. If you invest $100,000, what will your return be in 20 years, assuming that rate stayed consistent?
As you can see, the answer is $320,713.55—with no further deposits.
The future value calculator can also be useful to estimate inflation. Let’s say your annual expenses for food, housing, and utilities and other expenses are now $5,000 per month. If you assumed 3 percent inflation over the next 20 years, what would that same lifestyle cost? The future value calculator reveals the answer to be 7429.74 per month:
Let’s look at using the Payment calculator to estimate the payment for a loan or mortgage. Because the calculators can hold four different sets of data, it’s an ideal vehicle for comparing interest rates, repayment schedules, and more. Plus, the variables needed are usually readily available.
Input “0” as the future value, because the goal is to end with a loan balance of zero. Additionally, you can identify a loan amount, an interest rate, and often a time frame. For this example, we’ll look at a $200,000 loan over 15 years, with an interest rate of 5%.
NOTE: When you’re working with a loan balance you must make the balance a negative number. Otherwise, the answer will not accurately reflect the truth. So remember, debt is reflected in the calculators as a negative number.
Below, you’ll see that the monthly payment $1,581.59. From here, you can compare other interest rates in the other tabs. This is a great way to use the app.
Moreover, you can use these calculators to compare a 15-year mortgage to a 30-year mortgage, which is done by starting the comparison over equal time frames. This reveals the opportunity cost of the 15-year mortgage. (There is a blog post on the mortgage topic at the Truth Concepts blog (written for advisors) as well as a chapter in Busting the Interest Rate Lies that explains this further.)
Don’t make financial decisions without it!
There are many opportunities to use the TC financial calculator app in everyday life. We’re faced with big financial decisions all the time, so why not carry your own secret tool in your back pocket? Use it to inform your purchasing choices, set accurate expectations, and compare different financial options.
In the “full” Truth Concepts software, the financial calculators are just one of 20+ calculators and tools used by financial advisors and other professionals. If you are interested to learn more about Truth Concepts, go the website or you can even try a free 10-day trial of the FULL Truth Concepts software today.
Although most Truth Concepts users are financial professionals, the software as well as the 3-day training to use Truth Concepts (Truth Training) is open to anyone! We find a wide variety of people—from college students to accountants to real estate investors—have enjoyed using Truth Concepts and learning the many concepts they learn at the training.
Have fun with the TC Financial Calculator App!
By Kim Butler, Kate Phillips, and Elizabeth Hagenlocher.