Your age - Your current age in
years.
Millionaire target age - The age you want to
become a millionaire. For example, to find out what
it could take to be a millionaire by age 40, enter
40 here.
Amount currently invested - Total value of all
of your current investments. Although you could include
your home and personal property in this amount - it is
a bit more accurate to include only your savings, retirement
accounts and investments.
Savings per month - The amount you will contribute
each month to your investments. This calculator assumes
that all savings are added to your account at the beginning
of the 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 dependant on the
type of investments you select. From January 1970 to
December 2003, the average compounded rate of return
for the S&P 500, including reinvestment of dividends,
was approximately 11.7% per year. During this period,
the highest 12-month 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 long-term investments. This includes the potential
loss of principal on your investment.
Expected Inflation Rate - What you expect for
the average long-term inflation rate. This has been calculated
by the Consumer Price Index from 1925 to 2002 to be 3.1%. |
