Financial Formulas Used

Every Finstyra calculator is built on standard financial formulas. We believe in full transparency — here's exactly what we calculate and how.

Compound Interest & Savings

Compound Interest

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A = P(1 + r/n)^(nt)
A = Final amount
P = Principal
r = Annual rate (decimal)
n = Compounds per year
t = Years

Example: $10,000 at 8% monthly for 10y = $10,000 × (1 + 0.08/12)^120 = $22,196

Future Value of Lump Sum

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FV = PV × (1 + r)^n
FV = Future value
PV = Present value
r = Rate per period
n = Number of periods

Example: $50,000 at 7% for 20y = $50,000 × (1.07)^20 = $193,484

Savings Goal Time

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n = ln(FV/PV) / ln(1 + r)
n = Periods needed
FV = Target amount
PV = Current savings
r = Rate per period

Example: To reach $100,000 from $20,000 at 6%/yr: n = ln(5) / ln(1.06) ≈ 27.6 years

SIP & Systematic Investment

SIP Future Value

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FV = P × [((1 + r)^n - 1) / r] × (1 + r)
FV = Future value
P = Monthly SIP
r = Monthly rate
n = Total months

Example: ₹5,000/mo at 12%/yr for 10y: FV = 5000 × [(1.01^120 - 1)/0.01] × 1.01 = ₹11.6L

CAGR

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CAGR = (FV / IV)^(1/n) - 1
CAGR = Compound annual growth rate
FV = Final value
IV = Initial value
n = Years

Example: $10K → $18K in 6y: CAGR = (18000/10000)^(1/6) - 1 = 10.3%

Mortgages & Loans

Monthly Mortgage Payment (EMI)

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M = P × [r(1+r)^n] / [(1+r)^n - 1]
M = Monthly payment
P = Loan principal
r = Monthly interest rate
n = Total months

Example: $320,000 at 7%/yr for 30y: r=0.00583, n=360 → M = $2,129/mo

Loan-to-Value Ratio

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LTV = (Loan Amount / Property Value) × 100
LTV = Loan-to-value %
Loan Amount = Amount borrowed
Property Value = Appraised value

Example: $320K loan on $400K home: LTV = (320,000 / 400,000) × 100 = 80%

Retirement & FIRE

FIRE Number (4% Rule)

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FIRE Number = Annual Expenses × 25
25 = = 1 / 4% withdrawal rate
FIRE Number = Portfolio needed to retire
Annual Expenses = Yearly spending in retirement

Example: $60,000/yr expenses × 25 = $1,500,000 target portfolio

Safe Withdrawal Rate

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Annual Withdrawal = Portfolio × SWR
Annual Withdrawal = Amount withdrawn per year
Portfolio = Total portfolio value
SWR = Safe withdrawal rate (typically 4%)

Example: $1.5M × 4% = $60,000/yr sustainable withdrawal

ROI & Returns

Return on Investment

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ROI = (Net Profit / Cost of Investment) × 100
ROI = Return on investment %
Net Profit = Final value minus initial cost
Cost of Investment = Total amount invested

Example: Bought for $10,000, sold for $13,500: ROI = (3,500 / 10,000) × 100 = 35%

Rental Yield

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Yield = (Annual Rent / Property Value) × 100
Yield = Gross rental yield %
Annual Rent = Yearly rental income
Property Value = Purchase price

Example: $24,000 rent / $400,000 property = 6% gross yield