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Personal Economic Recovery Calculator

Recovering from a devastating investment loss takes both time and very often new contributions. Even a very large investment loss can be recouped if you are able to leave your money invested and begin adding new money. This calculator helps you determine what it might take to regroup, rebuild and re-grow after such an investment loss.

Definitions

Original investment

The amount of your investment before suffering your losses. This is the total you are looking to recover, or eventually have in your account.

Current value

Your current remaining balance after your losses.

Additions

The amount you will contribute each period to your account. This calculator also assumes that you make your contribution at the beginning of each period.

Expected Rate of Return

This is the annually compounded rate of return you expect from your investments. For the purposes of this calculator, taxation is not factored into the results. If you pay taxes on the interest, dividends or capital gains from these investments you may wish to enter your after tax rate of return.

The actual rate of return is largely dependent on the type of investments you select. From January 1970 to December 2008, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 9.7% (source: www.standardandpoors.com). During this period, the highest 12-month return was 61%, from June 1982 through June 1983. The lowest 12-month return was -39%, which happened twice, once from September 1973 to September 1974 and again from November 2007 to November 2008. Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

Expected Inflation Rate

What you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2008. The CPI for 2008 was 4.0%, as reported by the Minneapolis Federal Reserve.

​Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes.  We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
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