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Financial Calculators
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Savings Calculator
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Savings CalculatorConsistent 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.
Length of time to save
The total number of weeks, months or years you are
planning to save or invest.
Additional contributions
The amount that you plan on adding to your savings or
investment each period. The investment period options
include weekly, bi-weekly, monthly, quarterly and
annually. This calculator assumes that you make your
contributions at the beginning of each period.
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. For
example, from December 2000 to December 2010, the annual
compounded rate of return for the S&P 500 was 0.899%,
including reinvestment of dividends. From January 1970
to December 2010, the average annual compounded rate of
return for the S&P 500, including reinvestment of
dividends, was approximately 10.05% (source:
www.standardandpoors.com). Since 1970, the highest
12-month return was 61% (June 1982 through June 1983).
The lowest 12-month return was -43% (March 2008 to March
2009). 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 these scenarios are
hypothetical and 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.
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 usually 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.
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