- Starting amount
- The starting balance or current amount you have invested or saved.
- Additional contributions
- The amount that you plan on adding to your savings or investment each period. The investment period options include monthly, quarterly and annually. This calculator assume that you make your contribution at the beginning of each period.
- Years
- The total number of years you are planning to save or invest.
- Rate of return
- The annual rate of return for this investment or savings account. Historically the major stock indexes have averaged 11% to 12% per year. If you plan on withdrawing your money within five years, you may wish to choose a more conservative rate of return. An ordinary savings account earns 2% to 5%.
- Compounding
- This is 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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