Overview

Main Menu Name:  Accumulate

Calculates for any financial goal (such as college funding, retirement, or an extended vacation), the single payment (lump sum) immediately necessary, the annual contribution required to meet the goal considering the currently available capital.

In this article:

• Background
• Why should I use this calculator?
• Getting Started
• Entering Data
• Results

Background

The major difference between a goal and a dream is quantification. The desire for a "comfortable retirement" or "adequate financial security" is a dream; the desire for a specific amount of capital at a specific target date is a goal. That goal will be met by most people only if sub-goals are devised such as "to have $100,000 on hand in Z years, I must invest a lump sum of $X today or invest $Y each year."

Why should I use this calculator?

• To plan for any situation in which a significant amount of capital will be needed at a specified future date.
• To assess the feasibility of current objectives.
• To track progress toward a long-range goal.
• To determine whether interest rate assumptions have been reasonable.

Getting Started

The major difference between a goal and a dream is quantification. The desire for a "comfortable retirement" or "adequate financial security" is a dream; the desire for a specific amount of capital at a specific target date is a goal. That goal will be met by most people only if sub-goals are devised such as "to have $100,000 on hand in Z years, I must invest a lump sum of $X today or invest $Y each year."

Entering Data

1. Name:  Enter the name of the person(s) or business involved.
2. Purpose:  Enter the name of the financial goal that the client is trying to achieve.
3. Target Year for Accumulation:  Enter the year when the goal should be attained.
4. Start Year:  Enter the current year.
5. Assumed Inflation Rate:  Enter the assumed inflation rate for the investment.
6. Assumed Rate of Return:  Enter the assumed rate of return from the investment.
7. Amount of Capital Desired:  Enter the amount of capital needed to reach the goal.
8. Capital Currently Available:  Enter the amount of capital that is currently available to meet the goal.

Results

The program calculates the future, inflation-adjusted amount needed to achieve the specified goal, the amount presently available capital that will grow to the given specified earnings rate. The program also provides the balance that is required in the future, the single lump-sum that must be set aside today to fund the future goal, the annual deposit that will accumulate to the sum required.