Methodology

Transparency is at the core of Nobakaya MoneyLab. Below is an overview of the principles and mathematical models powering our calculators.

1. Time Value of Money (TVM)

Most of our calculators (SIP, Lumpsum, EMI, FIRE) rely on standard Time Value of Money equations. We generally use discrete monthly compounding for loans and monthly or annual compounding for investments, depending on the specific Indian financial product being modeled.

2. Tax Approximations

Where "After Tax" modes are available, they often use a simplified marginal tax rate reduction (e.g., reducing a 12% return to an effective 8.4% return for a 30% tax bracket). For precise Capital Gains, real-world taxation requires First-In-First-Out (FIFO) lot-wise tracking, which is highly complex to model without knowing exact purchase dates. Our tools will explicitly warn you when a simplified tax model is being used.

3. Inflation Adjustment

When calculating "Real Return" or inflation-adjusted corpus goals, we use the standard formula:
Real Return = [(1 + Nominal Return) / (1 + Inflation Rate)] - 1

4. Rounding Rules

Internally, all math is performed using high-precision floating-point numbers. Values are only rounded to the nearest Rupee when displayed on the screen or exported to CSV to prevent accumulating rounding errors. In loan amortization schedules, the final month's principal payment is explicitly adjusted to ensure the balance reaches exactly zero.