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Even a small difference in the interest you are paid on your savings can add up
over time. Use this calculator to see how different savings rates can impact your
savings strategy! This calculator can also show you how deposits at the start of
each month, compared to the end of the month, can impact your savings balance.
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Definitions
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- Starting amount
- The starting balance or current amount you have invested
or saved. If you haven't started saving yet, set the amount to "$0".
- Additional contributions
- The amount that you plan on adding to your savings
or investment regularly.
- Years
- The total number of years you are planning to save or invest.
- Annual percentage yield (APY)
- The annual rate of return for each savings
account. The actual rate of return is largely dependent on the type of investments
you select. The S&P 500 for the ten years ending on December 31st, 2011 had an annual
compounded rate of return of 2.92%, including reinvestment of dividends. From January
1970 through the end of 2011, the average annual compounded rate of return for the
S&P 500, including reinvestment of dividends, was approximately 10.01% (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 0.25% 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.
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Information and interactive calculators are made available
to you as self-help tools for your independent use and are not intended to provide
investment advice. We can not and do not guarantee their applicability or accuracy
in regards to your individual circumstances. All examples are hypothetical and are
for illustrative purposes. We encourage you to seek personalized advice from qualified
professionals regarding all personal finance issues.
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