The Future Value of $1

Expected Rate of Return (After Tax)

3% | 4% | 5% | 6% | 7% | 8% | 9% | 10% | |

1 | $1.03 | $1.04 | $1.05 | $1.06 | $1.07 | $1.08 | $1.09 | $1.10 |

2 | 1.06 | 1.08 | 1.10 | 1.12 | 1.14 | 1.17 | 1.19 | 1.21 |

3 | 1.09 | 1.12 | 1.16 | 1.19 | 1.23 | 1.26 | 1.30 | 1.33 |

4 | 1.13 | 1.17 | 1.22 | 1.26 | 1.31 | 1.36 | 1.41 | 1.46 |

5 | 1.16 | 1.22 | 1.28 | 1.34 | 1.40 | 1.47 | 1.54 | 1.61 |

10 | 1.34 | 1.48 | 1.63 | 1.79 | 1.97 | 2.16 | 2.37 | 2.59 |

15 | 1.56 | 1.80 | 2.08 | 2.40 | 2.76 | 3.17 | 3.64 | 4.18 |

20 | 1.81 | 2.19 | 2.65 | 3.21 | 3.87 | 4.67 | 5.60 | 6.73 |

25 | 2.09 | 2.67 | 3.39 | 4.29 | 5.43 | 6.85 | 8.62 | 10.84 |

30 | 2.43 | 3.24 | 4.32 | 5.74 | 7.61 | 10.06 | 13.27 | 17.45 |

Monthly Investment Needed to Save $100 within a Certain Period

Yeaars Expected Rate of Return (After Tax)

3% | 4% | 5% | 6% | 7% | 8% | 9% | 10% | |

1 | $82.19 | $81.82 | $81.44 | $81.07 | $80.69 | $80.32 | $79.95 | $79.58 |

2 | 40.48 | 40.09 | 39.70 | 39.32 | 38.94 | 38.56 | 38.18 | 37.81 |

3 | 26.58 | 26.19 | 25.80 | 25.42 | 25.04 | 24.67 | 24.30 | 23.93 |

4 | 19.63 | 19.25 | 18.86 | 18.49 | 18.11 | 17.75 | 17.39 | 17.03 |

5 | 15.47 | 15.08 | 14.70 | 14.33 | 13.97 | 13.61 | 13.26 | 12.91 |

10 | 7.16 | 6.79 | 6.44 | 6.10 | 5.78 | 5.47 | 5.17 | 4.88 |

15 | 4.41 | 4.06 | 3.74 | 3.44 | 3.15 | 2.89 | 2.64 | 2.41 |

20 | 3.05 | 2.73 | 2.43 | 2.16 | 1.92 | 1.70 | 1.50 | 1.32 |

25 | 2.24 | 1.95 | 1.68 | 1.44 | 1.23 | 1.05 | 0.89 | 0.75 |

30 | 1.72 | 1.44 | 1.20 | 1.00 | 0.82 | 0.67 | 0.55 | 0.44 |

WORKSHEET:

Let's first look at Table 1. Ask yourself this, if you had $1 and
put it in the bank at 5% for one
year, how much would you have at the end (assume annual compounding)?
Look at year 1 under
column 5% and you would see $1.05. If you had $23,641 to invest the
same way, how much
would you have? Simple, just multiply $23,641 by 1.05 = $24823.05.

Now, how much would you have at 8% for 15 years? You'll find the
amount is $3.17. If you had
$5,000 already invested, it would have grown to $5,000 x 3.17 =
$15,850.

Let's do Table 2. Assume you needed $1,000 five years from now and
are willing to save monthly.
How much would you need to save per month if you put it in a savings
account earning 3%?
(Remember the numbers are based on an after tax basis). Under year 5
and 3%, you would find
the number $15.47. That's how much you would have to put away to have
$1,000 in five years.
What if you could earn 8% after tax. You can see that the monthly
investment has dropped to
$13.26.

Now let's do real life. Assume you want to buy a boat in five years
for $10,000. You have $6,000
already saved and it is earning 6% after tax. How much would you have
in 5 years? Look at Table
1, 5 years, column 6%. The number is 1.34. Your $6,000 would have grown
to $6,000 x 1.34=
$8,040.

You need $15,000; you have $8,040 so that means you will be $7,000
(rounded) short when five
years are up. So go to table 2. Assuming you would earn 5% after tax on
a monthly investment,
look at 5 years, 5% column. It says you would need to save $14.70 per
month PER THOUSAND.
You need $7,000 so the amount you need to save would be $14.70 x 7=
$102.90

This is the same method you use for college savings or literally anything else.