- 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. This calculator will contribute this amount to your savings 252 times per year. 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 2006, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.5% per year (source: www.standardandpoors.com). 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. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect additional sales charges and fees that funds may charge.
- Compounding
- Earnings on an investment's earnings, plus previous interest. This calculator assumes that all interest is compounded annually, but you being receiving interest on your contributions immediately.
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