The Return Required Calculator

Use this calculator to estimate the annual Rate of Return required of a portfolio designed to meet each of the goals you identified on your Goals Summary Worksheet. You can test three different goals, one per row, and then change the input variables to see how the Required Return % is affected. The data entry fields are explained below the calculator and come from the Goals Summary Worksheet.

Note 1: Return Rates calculated are estimates only and are based on a series of assumptions. Calculators using different assumptions will produce different results.

Note 2: For percentages just enter whole numbers - e.g. for 20% enter 20.

Note 3: Do NOT enter commas, decimal points or dollar signs in any of your numbers - e.g. for $100,000.00 enter 1000000.

Input the following factors for each of your scenarios, one per row:

Your Goal - This is the monetary goal you want to achieve as a result of your investment activities by the end of the Number of Years you specify. What about inflation? Good question. One million dollars in 20 years just isn't going to mean as much as it does today. We'll let you decide how to deal with inflation in this calculator. The simplest method is to just assume that your Monthly Deposit total will increase at the same rate as inflation so that inflation is cancelled out to a large degree. Or you can go down to the Goal Inflator Calculator below this one and enter your goal's current value and an inflation number. Then come back here and enter the result as your Goal.

Initial Deposit - This is the amount of money you are starting with. Obviously this number can be zero if you are just beginning your investing life.

Monthly Deposit - This is the amount of money you are willing to add to your investment plan each month.

Number of Years - This is the time horizon for your investment goal in years.

Your Tax Rate % - This is your tax bracket. If your goal scenario is for your IRA account or other tax-sheltered plan just leave this entry at zero.

Calculate - When you click this button you will see the Required Return and the Final Total displayed for the row in which you clicked the button. The Required Return is the percentage you will need to achieve each year to reach your target goal. The Final Total shows the resulting dollar total. Note that it will vary slightly from your stated goal due to rounding factors.

Reset - This button clears your entries for the row and returns their value to zero.

Required Return % - This is the return percentage that you will need to achieve EACH YEAR of your portfolio holding period to achieve your specified goal.

Final Total $ - Because of necessary "rounding" error the final total amount you will have at the end of your holding period will be slightly higher than your specified goal. This is the final dollar amount.