Tithing

Tithings and Savings Add Up

The purpose of this article is to show the future financial worth of annual contributions. These numbers can even be used to estimate future financial savings, especially retirement.

Using the Tables: There are two tables, one for twenty years of contributions and another for forty years of contributions. Choose the table that fits your situation best. Using this table find the approximate annual contribution that you make or plan to make each year. The approximate future worth of the yearly contributions will appear in the column on the right.

For example: If an individual made annual contributions of 5,000 dollars a year for forty years the future financial worth of the contributions at the end of the forty years would be 1.3 million dollars.

Links:
If you are interested in tailoring the calculation to your specific investment plans visit here:
http://www.fremontbank.com/invest.cgi
http://www.spinners.com/spinners/java/invest/
http://merchantsbankms.com/depositservices/earnings.htm

My calculations assume a year end investment with an 8% return. For this reason my calculations may differ slightly from ones made by the above links. I have also used an 8% effective annual interest rate to reflect a conservative investment approach. Many people can find financial investments with a 10 to 15 % annual rate of return. When calculating your financial future you should also consider inflation. For instance, if your investment is 11 % and you have an estimated 3% inflation rate, your effective interest rate is 8%. I have chosen an 8% effective interest rate because I have seen the number frequently used in retirement books and brochures for long term planning.

Forty Years of Contributions

Assumptions:
Interest= 8% (effective interest rate per year)
Years = 40 (Number of years or number of interest periods)
Future worth equals amount at end of 40 years.

Annual Contribution ($)	Future Worth ($)
100	26,000
1,000	260,000
2,000	520,000
3,000	780,000
4,000	1,000,000
5,000	1,300,000	10,000	2,600,000
20,000	5,200,000

Twenty Years of Contributions

Assumptions:
Interest= 8% (effective interest rate per year)
Years = 20 (Number of years or number of interest periods)
Future worth equals amount at end of 20 years.


Annual Contribution ($)	Future Worth ($)
100	4,600
1,000	46,000
2,000	92,000
3,000	140,000
4,000	180,000
5,000	230,000	10,000	460,000
20,000	920,000

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