Consistent investments over a number of years can be an effective strategy to accumulate
wealth. Even small additions to your savings add up over time. This calculator demonstrates how
to put this savings strategy to work for you! Click View Report to see a detailed
summary.
Definitions
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 dependent 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 percent per year (source: www.standardandpoors.com).
During this period, the highest 12-month return was 61 percent, and the
lowest was -39 percent. Savings accounts at a bank pay as little as 1
percent 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 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 "compound annually." 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.
Information and interactive calculators are made available to you as
self-help tools for your independent use and are not intended to provide investment advice. We
can not and do not guarantee their applicability or accuracy in regards to your individual
circumstances. All examples are hypothetical and are for illustrative purposes. We encourage
you to seek personalized advice from qualified professionals regarding all personal finance
issues.
Note: The above information is not intended or written to be used as
legal or tax advice. It was written solely to support the sale of annuity products. As a
taxpayer, you cannot use it for the purposes of avoiding penalties that may be imposed under
the tax laws. You should seek advice on legal or tax questions based on your particular
circumstances from an independent attorney or tax advisor.
