Back To Article | Saving for Your Specific Goals |

**DIRECTIONS:** **From the tables below, choose rates of return that are consistent
with your time frame for achieving your goal. Keep in mind that higher rates of
return require that you take greater risk. If your time frame is short, you
should be more conservative in your rate of return assumption than if your
time frame is long. **

TABLE 1 INFLATION (at 4% per year) | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|

Years to goal | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |

Inflation factor | 1.04 | 1.08 | 1.12 | 1.17 | 1.22 | 1.27 | 1.32 | 1.37 | 1.43 | 1.48 | 1.80 | 2.19 |

TABLE 2 SAVINGS GROWTH FACTOR | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|

Years to goal | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |

6% rate of return | 1.06 | 1.12 | 1.19 | 1.26 | 1.34 | 1.42 | 1.50 | 1.59 | 1.69 | 1.79 | 2.40 | 3.21 |

8% rate of return | 1.08 | 1.17 | 1.26 | 1.36 | 1.47 | 1.59 | 1.71 | 1.85 | 2.00 | 2.16 | 3.17 | 4.66 |

10% rate of return | 1.10 | 1.21 | 1.33 | 146 | 1.61 | 1.77 | 1.95 | 2.14 | 2.36 | 2.59 | 4.18 | 6.73 |

TABLE 3 MONTHLY INVESTMENT FACTOR | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|

Years to goal | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |

6% rate of return | 12.4 | 25.6 | 39.5 | 54.4 | 70.1 | 86.8 | 104.6 | 123.4 | 143.5 | 164.7 | 292.3 | 464.4 |

8% rate of return | 12.5 | 26.1 | 40.8 | 56.7 | 74.0 | 92.6 | 112.9 | 134.8 | 158.5 | 184.2 | 348.3 | 592.9 |

10% rate of return | 12.7 | 26.7 | 42.1 | 59.2 | 78.1 | 98.9 | 122.0 | 1474 | 175.5 | 206.6 | 417.9 | 765.7 |

STEP 1: Determine your investing goal | |

1. Cost of your goal in today's dollars | $ |

2. Number of years to your goal | |

3. Inflation factor (from Table 1) | |

4. Future cost of goal (multiply line 1 by line 3) | $ |

STEP 2: Estimate your investment return
| |

5. Average pretax rate of return between now and the achievement of your goal | % |

STEP 3: Calculate the future value of your current savings for this goal
| |

6. Current savings for this goal | $ |

7. Savings growth factor (from Table 2) | |

8. Future value of current savings (multiply line 6 by line 7) | $ |

9. Additional amount needed to reach goal (subtract line 8 from line 4) | $ |

STEP 4: How much do you need to save?
| |

10. Monthly investment factor (from Table 3) | |

11. Amount to save monthly (divide line 9 by line 10) | $ |

12. Amount to save annually (multiply line 11 by 12) | $ |

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