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Savings Distribution Calculator
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his calculator is designed to help you determine how much of your savings remains
after a series of withdrawals. Enter your starting amount, how much to withdraw
and how often and we will calculate your expected final balance.
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Definitions
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- Starting amount
- The starting balance or current amount you have invested
or saved.
- Years
- The total number of years you are planning to continue your withdrawals.
- Periodic withdrawal
- The amount that you plan on distributing (or withdrawing)
from your savings or investment each period. The investment period options include
monthly, quarterly and annually. This calculator assumes that you make your withdrawal
at the beginning of each period.
- 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. 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.
- Compounding
- Earnings on an investment's earnings, plus previous interest.
This calculator allows you to choose the frequency that your investment's interest
or income is added to your account. The more frequently this occurs, the sooner
your accumulated interest income will generate additional interest. For stock and
mutual fund investments, you should choose 'Annual'. For savings accounts and CDs,
all of the options are valid, although you will need to check with your financial
institution to find out how often interest is being compounded on your particular
investment.
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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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