
Savings Calculator
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!
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 2004, the average compounded rate of
return for the S&P 500, including reinvestment of dividends, was
approximately 11.5% per year. During this period, the highest 12month return
was 64%, 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 longterm 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.


