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Savings, Taxes and Inflation
Information and interactive calculators are made available to you as self-help tools for your independent use. We cannot and do not guarantee their accuracy or their applicability to your circumstances. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
- Year:: The number of years you have to save.
Monthly Contribution: The amount you will contribute each month to your savings. This calculator assumes that you make your contribution at the beginning of each month.
Amount currently invested: Total you have saved to date to be included in this analysis.
Expected rate of return:This is the annually compounded rate of return you expect from your investments
before taxes. The actual rate of return is largely dependant 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 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.
Federal tax rate: Your marginal federal tax rate.
State tax rate: Your marginal state tax rate.
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 2004.
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