The Financial Calculator

If you're going to be an investor, you need a good handheld financial calculator, otherwise you'll have to do all of your financial calculations in a computer spreadsheet. Now, there's nothing wrong with relying on a computer spreadsheet, but it's a lot more convenient to keep a calculator handy. Actually, you'll probably find that one is better than the other for specific purposes, so you should have both.

In selecting a financial calculator, the first thing you will have to do is decide if you want one that uses RPN, i.e., Reverse Polish Notation or algebraic data entry. (RPN is a system of data entry that is superior to algebraic entry for executing complex calculations.) However, if you're not familiar with RPN, be aware that it takes some getting used to. And if you'll be using non-RPN calculators for other purposes, you may find switching back and for rather confusing. It's probably best to go all RPN or all algebraic.

If you want RPN, your only choice will be the advanced Hewlett Packard calculators: 12c, 12c Platinum or 17bII+. The 12c is RPN-only and the other two can be toggled to RPN or algebraic. If you prefer algebraic entry, you can choose from the offerings of Hewlett Packard, Texas Instruments, Sharp, Casio and others.

Next, you must decide whether you want a basic, advanced or very advanced calculator. Basic, such as the HP 10BII or the TI BAII Plus, should be adequate for most mutual fund investors. Advanced, such as the HP 17bII+ and the TI BAII Plus Professional, offer more functions for analyzing investments. However, as the advanced calculators are not significantly more complex than the basic calculators, you may want to choose one of them to ensure that you have all of the functionality that you will eventually need as you become a more sophisticated investor. The very advanced calculators usually have a few more complex functions and have graphing capabilities.

Whatever your choice with respect to the level of sophistication, be sure the one you select can perform all of the basic TVM (time value of money) calculations plus 1/x, Y^x, X² and square root. This is the bare minimum to give you the functionality you will need as a mutual fund investor.

Most financial calculators come with documentation that walks you through all the functions with real examples. In fact, you can gain a good understanding of the time value of money just by working your way through part of a user's manual.

If you have been using a particular manufacturer's handheld calculators for years, you may want to stick with them if they have financial calculators in their line. Just make sure you buy a calculator that does everything you need it to do and that you're comfortable using it.

Return to the top of The Financial Calculator.

Return to the Investing Basics summary page.

Move on to the next subsection, Interest Rates.