Definitions
- Starting amount
- The starting balance or current amount you
have invested or saved. For this calculator, we assume your current
savings is earning your annual rate of return whether you decide to
delay your new contributions or not. For example, if you have a
current balance of $1000 and never make any new contributions, your
delayed and non-delayed results will be the same.
- Additional contributions
- The amount that you plan on adding to your
savings or investment each period. The options include monthly,
quarterly and annually. This calculator assumes that you make your
contributions at the beginning of each period.
- Years
- The total number of years you are planning to
save or invest.
- Investment rate of return
- Rate of return on investments. This is the
return that you would make if you were to invest your down payment or
security deposit instead of using it in your auto purchase or lease.
The actual rate of return is largely
dependant on the type of investments you select. From January 1970 to
December 2004, the average compounded rate of return for the S&P
500, including reinvestment of dividends, was approximately 11.5% per
year. During this period, the highest 12-month return was 64%, and the
lowest was -39%. Savings accounts at a bank pay as little as 1% or
less. It is important to remember that future rates of return can't be
predicted with certainty and that investments that pay higher rates of
return are 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.
-
- Years to wait
- The number of years you might wait before you
begin saving. We will then delay your new contributions for that
number of years.
- Cost of waiting
- The difference in your savings or investment
balance between your delayed and non-delayed plans.
- Required contribution
- If you wait to start saving, this is the
amount you would need to contribute each period to achieve the same
result as starting your savings plan immediately.
|
