- Years
- Total years of investment. You can try different years to analyse the change in final result.
- Rate of return
- This is the rate of return you are expecting from your investments. You can also select the accumulation frequency of your earnings from the investments. 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 1% on savings accounts.
- Initial investment
- Amount you have already invested. This is the beginning amount of your investment.
- Annual investments
- Your total amount of yearly contribution toward the investments. you can adjust this amount for subsequent inflation rate by selecting the check box at the bottom part of the calculator.
- Inflation rate
- Your expected average rate of inflation over long-term period. This can be calculated using the CPI or Consumer Price Index.
- Tax rate
- The yearly percentage rate of tax applicable on your investment return.
- Inflation adjustment
- Checking this box will adjust your investment amount for expected level of inflation. Therefore, the investment amount will be increased gradually.
- Show values after inflation
- In case you want to see the purchasing power of future cash inflow in terms of current economic situation, you should check this box.
- Compound Interest
- Compound interest is the total amount charged on previous interest, plus current period’s interest. The more frequently this occurs, the sooner your accumulated interest will generate additional interest. You should check with your financial institution to find out how often interest is being compounded on your particular investment.
- Compounded interest return
- Calculated after-tax return based on annually compounded interest.
- Simple interest return
- Calculated after-tax return based on simple interest rate.
- Total invested capital
- The total amount of contributions to the investment so far.
- Investment final total
- Final cash inflow that will be gained by you. This can also be adjusted for expected inflation by checking the inflation adjustment box.