Is my spreadsheet correct?

[mooshie]

Hello,
I've been playing with my spreadsheets tonight and messing around with different scenarios and I finally came up with one that could be realistic (as in money we could actually come up with). The numbers it came out with were kinda cool, and actually doable, so now I'm wondering if my spreadsheet is right? I'd like a few pair of extra eyes to let me know if they see a problem.
For simplicity I put in a deposit of $50K in August 2014, then added $30K each year in July starting in 2015 then again in 2016, 1017, and 2018. For a total principal deposit of $170K over 4 1/2 years. I put in a rate of 12% earnings. By the end of 2026 (so just over 12 years) it told me I would have $600K. Do these numbers seem right? Did I miss something?

I'd love some feedback.
Thanks!

[deborah]

I think you're missing out on the negatives - tax on earnings, inflation... - that 12% seems awfully high.

[MDM]

Your math is correct.  As deborah states, however, there is that small issue of ensuring you actually get a 12% annual return....

[arebelspy]

Not to mention that 600k in 12 years will buy a lot less than it does now, unless you're assuming that's a 12% real return (so 15-16% nominal return, assuming 3-4% inflation).  Earning 15-16% CAGR for 12 years in a row is REALLY a stretch, IMO.  But I don't know, my crystal ball is broken.

So that 600k is probably overly optimistic, and not in today's dollars.

Most people I've seen tend to assume a real return of 4-7%.

As far as the math.. it's close.  I get 570k, not 600k.  (Also it seems your contributions are over 4 years, not the 4 1/2 that you say.) 

50k today, adding 30k annually at 12% for 4 years gives you ~$231k.  Then letting that sit with no more contributions at 12% for another 8 years gives you $573k.

Yes?  Or did I goof something up?

Assuming a 7% real return (what the stock market has done historically - 10% minus 3% inflation, for 7% real), you'd have ~$350k in today's dollars.  Assuming a more pessimistic 4% real return, you'd have ~257K in today's dollars.

[MDM]

As far as the math.. it's close.  I get 570k, not 600k.  (Also it seems your contributions are over 4 years, not the 4 1/2 that you say.) 

Results depend on the compounding period: 570k looks about right for annual, and ~620k for monthly.  But that difference is well within the uncertainty of all the other caveats posted here.

[zmhulen@mac.com]

Are you looking at just stocks or Gold and silver also. With a 63 to one ratio of silver to gold you can get 63 oz of silver now for about 1,300 hold it for 5 to 10 years or less and as that ratio returns to its historical average of 14/1  trade in for your 5 oz of gold. Diversify out of dollars and into real tangible assets.  Last 10 years gold and silver have gained  over 300%   Gold has gone over 2x what it was in the  '80. Silver is about 1/2 what it was in the '80 high  SILVER IS ON SALE


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[arebelspy]

Most of us prefer productive assets zm, and in either case AA is not relevant to this thread.