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Definitions
Amount Currently
Saved
Total you currently have saved toward this savings goal.
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). The CPI for 2010
was 2.4%, as reported by the Minneapolis Federal Reserve. From 1925 through
2010 the CPI has long-term average of 3.1% annually. Over the last 30 years
highest CPI recorded was 13.5% in 1980.
Expected
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.
For example, from December 2000 to December 2010, the annual compounded rate
of return for the S&P 500 was 0.899%, including reinvestment of dividends.
From January 1970 to December 2010, the average annual compounded rate of
return for the S&P 500, including reinvestment of dividends, was approximately
10.05% (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 may pay as
little as 1% 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.
Monthly Savings
The amount you will contribute each month to your investments. This calculator
also assumes that you make your contribution at the beginning of each month.
Savings Goal
The amount you wish to have in savings at the end of this savings plan.
Years To Save
The number of years you have to save.
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 regarding
your individual circumstances. All examples are hypothetical and are for
illustrative purposes. We encourage you to seek personalized advice from
qualified professionals, at the credit union or elsewhere, regarding all
personal finance issues.
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