Starting amount: The starting balance or current amount you have invested or saved. For this calculator, we assume your current savings is earning your annual rate of return whether you decide to delay your new contributions or not. For example, if you have a current balance of $1,000 and never make any new contributions, your delayed and non-delayed results will be the same.
Additional contributions: The amount that you plan on adding to your savings or investments each period. The 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 2007, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.4% per year (source: www.standardandpoors.com). During this period, the highest 12-month return was 61%, 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. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect additional sales charges and fees that funds may charge.
Years to wait: The number of years you might wait before you begin saving. We will then delay your new contributions for that number of years.
Cost of waiting: The difference in your savings or investment balance between your delayed and non-delayed plans.
Required contribution: If you wait to start saving, this is the amount you would need to contribute each period to achieve the same result as starting your savings plan immediately.