- Initial deposit amount
- Amount of your initial deposit, or account balance, as of the present value date.
- Future value
- Total future value of the stream of payments, plus the future value any initial deposit amount. This includes the compounding of interest at the calculated rate on an annual basis.
- Start date
- Date to calculate the present value. We assume that this is also the date of the first periodic payment if deposits are made at the beginning of a period.
- End date
- Date your investment or account will be worth the entered future value.
- Calculated rate of return
- The calculated rate of return for this investment or account. The actual rate of return is largely dependent on the type of investments you select. The S&P 500 for the ten years ending on December 31st, 2011 had an annual compounded rate of return of 2.92%, including reinvestment of dividends. From January 1970 through the end of 2011, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.01% (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 at a bank may pay as little as 0.25% 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.
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