- Starting amount
- The starting
balance or current amount you have invested or saved.
- Additional
contributions
- The amount that
you plan on adding to your savings or investment each period. The
investment period options include monthly, quarterly and annually.
This calculator assumes that you make your contributions at the beginning
of each period.
- Years
- The total number
of years you are planning to save or invest.
- Rate of return
- The annual rate
of return for this investment or savings account. The actual rate
of return is largely dependant on the type of investments you select.
From January 1970 to December 2005, the average compounded rate of
return for the S&P 500, including reinvestment of dividends, was approximately
11.4% per year. During this period, the highest 12-month return was
61%, and the lowest was -39%. Savings accounts at a bank pay as little
as 1% or less. It is important to remember that future rates of return
can't be predicted with certainty and that investments that pay higher
rates of return are 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.
- Compounding
- Earnings on an
investment's earnings, plus previous interest. This calculator allows
you to choose the frequency that your investment's interest or income
is added to your account. The more frequently this occurs, the sooner
your accumulated earnings will generate additional earnings. For stock
and mutual fund investments, you should choose 'Annual'. For savings
accounts and CDs, all of the options are valid, although you will
need to check with your financial institution to find out how often
interest is being compounded on your particular investment.
|