Total amount of money you can save monthly by spending less on entertainment, budget, and utility. The calculator will assume that you will invest the total amount you saved.
Annual rate of return
Your expected rate of return from the investment. Please note that, the type of investment you choose has an effect on the actual rate of return. For example, the average annual compounded rate of return for the 10 years S&P 500 ended on 2012 was about 7.10%. Bank or savings institutions can pay as little as 0.25% to 1% on savings accounts. It is important to know that future rates of return cannot be foreseen and investments that pay higher rates of return have a higher risk and are more volatile.
Years to save
Number of years you have planned to save by spending less.
Federal tax rate
Your estimated rate of federal tax on the investment earnings.
State tax rate
Applicable rate of state tax on your investment earnings.
Total savings before taxes
Value of the savings before state and federal taxes are adjusted.
Total savings after taxes
Total savings before tax minus federal and state tax rates. It is assumed that, the taxes are incurred by you as soon as your earnings accrue.