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Investment Goal Calculator
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What will it take to reach your investment goal? Use this investment goal calculator
to determine how much your investment might grow before taxes, after taxes and after
taxes and inflation. It will also provide suggestions on what to change if your
plan doesn't look like it will meet your investment goal.
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Definitions
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- Investment goal
- Your goal for the total value of your investment or investments.
- Number of years to accumulate
- The number of years you have to save.
- Amount of initial investment
- Total you amount you will initially invest
or have currently have invested toward your investment goal.
- Periodic contribution
- The amount you will contribute each period to your
investment. You are also able to select whether you wish to have your contribution
happen at the beginning or the end of the period.
- Investment frequency
- The frequency you will make regular contributions
to this investment.
- Rate of return on investment
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This is the rate of return you expect from your investments. You are also able to
select the frequency that earnings are compounded in your investment account. The
actual rate of return is largely dependent on the type of investments you select.
From January 1970 to December 2008, the average annual compounded rate of return
for the S&P 500, including reinvestment of dividends, was approximately 9.7% (source:
www.standardandpoors.com). During this period, the highest 12-month return was 61%,
from June 1982 through June 1983. The lowest 12-month return was -39%, which happened
twice, once from September 1973 to September 1974 and again from November 2007 to
November 2008. Savings accounts at a bank may pay as little as 1% or less but carry
significantly lower risk of loss of principal balances.
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 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.
- 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 2008. The CPI
for 2008 was 4.0%, as reported by the Minneapolis Federal Reserve.
- Federal marginal tax rate
- Your Federal marginal tax rate. You can use
the table below to estimate your marginal tax rate:
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Filing Status and Income Tax Rates 2009
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Tax rate
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Married filing jointly
or Qualified Widow(er)
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Single
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Head of household
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Married filing separately
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10%
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$0 - 16,700
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$0 - 8,350
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$0 - $11,950
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$0 - 8,350
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15%
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$16,701- 67,900
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$8,351- 33,950
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$11,951- 45,500
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$8,351- 33,950
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25%
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$67,901- 137,050
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$33,951- 82,250
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$45,501- 117,450
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$33,951- 68,525
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28%
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$137,051- 208,850
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$82,251- 171,550
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$117,451- 190,200
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$68,526- 104,425
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33%
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$208,851- 372,950
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$171,551- 372,950
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$190,200- 372,950
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$104,425- 186,475
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35%
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over $372,950
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over $372,950
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over $372,950
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over $186,475
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Source: http://www.irs.gov/pub/irs-drop/rp-08-66.pdf
- State marginal tax rate
- Your marginal state tax rate. If your state taxes
are deductible on your Federal return, we will take this into account when calculating
your combined state and Federal marginal tax rate.
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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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