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Tuesday, January 14, 2014

Investment Calculator- How Long to Reach Retirement?

Investment Calculator

This investment calculator determines the time to reach your financial goal.  How long would it take to make a million dollars from your investments?  This calculator provides an answer.

This investment calculator allows you to input the average rate of return from your investments as well as allowing adjustment for inflation and capital gains taxes.  The investment calculator is developed in JavaScript and runs in your web browser.  Just enter your financial goal, set the parameters, and click "Compute".

The default goal is one million dollars.  Depending on your retirement plans or financial goals, you can adjust the Investment Goal in the investment calculator up or down.


Investment Calculator by Dr. Penny Pincher
How long to reach your financial goal?
Copyright (c) 2014. All Rights Reserved
http://pennypincherjournal.blogspot.com
INPUTS
Enter Investment Goal ($):
Enter Starting Investment Amount ($):
Enter Monthly Investment Contribution ($):
Enter Average Annual Rate of Return (%):
Adjust for Inflation?:
Enter annual inflation rate (%):
Adjust for Capital Gains Taxes?:
Enter capital gains tax rate (%):
RESULTS
Time to Reach Investment Goal (years):
Amount Obtained in Current Dollars ($):
Total Gains from Investment ($):
Total Capital Invested ($):

Investment Calculator Instructions

Enter Investment Goal ($):
How much are you trying to accumulate from your investments?

Enter Starting Investment Amount ($):
If you a current investment to use as a starting point, you can enter that amount.  Otherwise enter 0 if you do not have any investment already.

Enter Monthly Investment Contribution ($):
Inter the amount you can invest every month going forward.

Enter Average Annual Rate of Return (%):
The long-term historical return from the stock market is about 8%, including the Great Depression and other economic downturns.

This page provides a good reference on compound interest calculations.  Monthly compounding of investment returns is used in the Investment Calculator.

Adjust for Inflation?:
The Investment Calculator allows you to choose whether or not to adjust your investment goal for the effects of inflation.  The long-term average rate of inflation is around 3%.  You may want to adjust your goal for inflation  If your investment goal is to reach one million dollars, you will need more than one million dollars in the future to purchase what one million dollars can buy today.  Since prices are rising slowly but steadily, you can automatically adjust your investment goal to account for inflation.

Adjust for Capital Gains Taxes?:
If you are investing in taxable investment accounts, you'll want to account for capital gains taxes.  For example, if you make $1000 of gains from an investment and you have to pay 28% capital gains tax, you'll need to come up with $280 for the IRS.  If you check the capital gains option, the tax payment is taken from your investment amount.

If your investment is in ROTH, IRA, 401K, or other tax-deferred investment accounts, you will not need to pay capital gains taxes if you follow the rules.

When payment of capital gains tax is selected, the total gains plus total capital invested will exceed the account balance result.  The difference between these totals reflects the removal of funds to pay taxes as capital gains are realized.

Investment Calculator Results

Time to Reach Investment Goal (years):
This result shows how long it will take to reach your investment goal in years, based on the input parameters.  If it will take more than 100 years to reach your goal, the calculator returns "More than 100!" for the time that it will take.  If this happens, either try investing more or choose a smaller goal.

Amount Obtained in Current Dollars ($):
This result is the amount obtained at the time your goal is reached.  The Investment Calculator uses monthly totals, so the amount obtained may be slightly larger than the goal at the end of the last month of your investment.  If you adjust for inflation, the amount obtained can be significantly more than your goal- this reflects the reduced value of money in the future due to inflation.

Total Gains from Investment ($):
The total gain from your investment is shown.

Total Capital Invested ($):
Your total investment of capital is shown.


Recommended Reading:
How to Make 1 Million Dollars by Investing Your Car Payment

How to Get Rich


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