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I'm working on a retirement planning spreadsheet under the theory that when completed, I'll understand the whole process a whole lot better than if I use a pre-made retirement calculator.

A simple question: when calculating the effects of interest for this purpose (starting with an assumed yearly growth rate), is it best to simply use that yearly growth rate and intervals of years, or divide the growth rate by 12 and use intervals of months? The latter appears to yield a higher return, which upon reflection makes sense if you're applying the interest each month. I suppose it doesn't make a whole lot of difference as long as consistency is maintained - I'm applying an arbitrary guesstimate as to future growth rates, after all.

For purposes of retirement planning, what is the standard way of doing this? When you say "I expect my investments will grow 8% a year", what exactly are you saying - you end the year with $X + $X*.08, or ($X + $X*.0067) compounded 12 times?

FWIW, I'm using the Excel Future Value formula:
FV(Rate,# payment periods,payments per period,Beginning value)

Thanks for helping!
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