|
4 % |
5 % | 6 % | 7 % | 8 % | 9 % | 10 % | |
| 5 YEARS |
1.22 |
1.28 | 1.34 | 1.40 | 1.47 | 1.54 | 1.61 |
| 7 YEARS | 1.32 | 1.41 | 1.50 | 1.61 | 1.71 | 1.83 | 1.95 |
| 10 YEARS | 1.48 | 1.63 | 1.79 |
1.97 |
2.16 | 2.37 | 2.59 |
| 15 YEARS | 1.80 |
2.08 |
2.40 | 2.76 | 3.17 | 3.64 | 4.18 |
| 20 YEARS | 2.19 | 2.65 | 3.21 | 3.87 | 4.66 | 5.60 | 6.73 |
| 25 YEARS | 2.67 | 3.39 | 4.29 | 5.43 | 6.85 | 8.62 | 10.83 |
| 30 YEARS | 3.24 | 4.32 | 5.74 | 7.61 | 10.06 | 13.28 | 17.45 |
| 35 YEARS | 3.95 | 5.52 | 7.69 | 10.68 | 14.79 | 20.41 | 28.10 |
| 40 YEARS | 4.80 | 7.04 | 10.29 | 14.97 | 21.72 | 31.41 | 45.26 |
This chart, using estimated rates of interest, will show you how much the
" THINGS " you own today will be worth in the future. For example, if
your savings accounts total $1240.00 today and you are earning 4%
interest,
then in five years, your savings account will be worth (or will
compound to) $1240.00 multiplied by 1.22
or $1512.80.
Plugging these factors into
,
you can
calculate the future worth of all of your assets.
1. Estimate at what rate your assets are growing--Say 5% for cash?
10% for stocks.
2. Determine the number of years that you want to project. 5 to 40 years.
3. Find the growth rate measurements in the above table.
4. Place these measurements in
the
,
table, using the column labeled GROWTH RATE COLUMN (column 3).
5. Multiply the Market Value (column 2 ) today by the growth rate (column 3) and put the answers in column 4, to see what your future assets will be worth. Hint: We also use this chart for determining what our future budgets may have to include. For example, if my Suburban costs $35,000 this year and we expect car prices to increase 4% a year, well now we can determine what my new suburban will cost in the future. If I buy a new Suburban every 5 years, in five years the $35.000 Suburban will cost me ($35,000 times, 1.22) or $42,700
6. Add up all of the new values and see what your total future asset values
MAY be!
We will need to know what your future assets will be worth when we attempt to
estimate what your retirement income needs will be.
Now, check the doubling factors highlighted above. Basically, they mean that your asset or your money will double in value. If you're earning 5%; it'll take say 15 years. See the 2.08. Or the 1.97 which shows that if you're earning 7%, it only takes 10 years to double your money. Ever heard of the Rule of 72? Basically this rule is a quick way to determine how long it takes for your money to double in value, given the interest rate you're earning. You just divide the number 72 by your interest rate to get the number of years.
For a full blown Retirement Seminar Outline, go to
or see the Slide show at
Where I explain this chart and a lot of others that relate to Earnings, Inflation and Compounded Interest
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