Savings Goal
What will it take to help reach your savings goals? This
financial calculator helps you find out. Enter in your savings plan
and view graphically your financial results. Click the report
button to get more information about your plan, and what you can do
to make sure that it is on track.
Definitions
- Savings goal
- The amount you wish to have in savings at the end of this
savings plan.
- Years to save
- The number of years you have to save.
- Amount currently saved
- Total you currently have saved toward this savings goal.
- Monthly savings
- The amount you will contribute each month to your investments.
This calculator also assumes that you make your contribution at the
beginning of each month.
- Expected rate of return
- This is the annually compounded rate of return you expect from
your investments. For the purposes of this calculator, taxation is
not factored into the results. If you pay taxes on the interest,
dividends or capital gains from these investments, you may wish to
enter your after-tax rate of return.
The actual rate of return is largely dependent on the type of
investments you select. The S&P 500 for the ten years ending on
December 31st, 2011 had an annual compounded rate of return of
2.92%, including reinvestment of dividends. From January 1970
through the end of 2011, the average annual compounded rate of
return for the S&P 500, including reinvestment of dividends,
was approximately 10.01% (source: www.standardandpoors.com). Since
1970, the highest 12-month return was 61% (June 1982 through June
1983). The lowest 12-month return was -43% (March 2008 to March
2009). Savings accounts at a bank may pay as little as 0.25% or
less but carry significantly lower risk of loss of principal
balances.
It is important to remember that these scenarios are
hypothetical and that future rates of return can't be predicted
with certainty and that investments that pay higher rates of return
are generally subject to higher risk and volatility. The actual
rate of return on investments can vary widely over time, especially
for long-term investments. This includes the potential loss of
principal on your investment. It is not possible to invest directly
in an index and the compounded rate of return noted above does not
reflect sales charges and other fees that funds and/or investment
companies may charge.
- Expected annual inflation rate
- What you expect for the average long-term inflation rate. A
common measure of inflation in the U.S. is the Consumer Price Index
(CPI). From 1925 through 2011 the CPI has a long-term average of
3.0% annually. Over the last 31 years highest CPI recorded was
13.5% in 1980.
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