What will it take to help reach your savings goals? Our savings account calculator wil help 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.
- 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. From January 1970 to December 2008, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 9.7% (source: www.standardandpoors.com). During this period, the highest 12-month return was 61%, from June 1982 through June 1983. The lowest 12-month return was -39%, which happened twice, once from September 1973 to September 1974 and again from November 2007 to November 2008. Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances. 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 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 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), which has a long-term average of 3.1% annually, from 1925 through 2008. The CPI for 2008 was 4.0%, as reported by the Minneapolis Federal Reserve.
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Our Savings Account Calculator May Surprise You
A savings account calculator can predict the future of your current savings plan. Saving for a rainy day is a necessary to deal with the current market conditions, layoffs, and slow hiring. Whether you are saving for a new house, a second car, retirement, vacation, or tuition, you need to have a fixed goal. More importantly, you need to be able to predict the success of your savings plan. Can you save the amount you planned in the estimated time? Will you have a comfortable nest-egg by the time you retire? Find out by using the savings account calculator.
Here is how the saving account calculator works. You fill in information about the following:
- The amount that you wish to save
- The amount you contribute every month
- How long you plan to save
- Whether you have already saved a certain amount
These are the non-variable factors that will determine if your savings goal is sustainable and has chances of succeeding. Once the savings account calculator has this information, it will calculate how long it will take for you to reach your objective.
There are two variable causes that you need to consider. First is the rate of inflation over the given period. You can enter an estimate by going through the Consumer Price Index the Bureau of Labor Statistics compiles every month. Studying the CPI for the current month as well as previous months will give you a fairly good idea about what to fill in the "inflation rate" slot.
You will also be asked to fill in rate of return - the profits expected from your investments. This amount is highly variable, especially for high risk investments. You can talk to your investment adviser if you are not sure what to fill in, in this slot.