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<<Thanks for your reply. However i was hoping for some feedback so that I could do it myself as the various savings calculators out on the web generate DIFFERENT results (i.e. which one is correct?)>>

I was really hoping you would get a better response to your question Scott, I have the same concerns. I was hoping your question would get more responses. I also rely on excel for my return calculations. How web savings calculators work are a mystery to me because there is no way to know for sure what assumptions they are using. Some take into consideration taxes, increases in contributions, etc…That's why I strongly believe in using Excel because you control the assumptions. I think one of the main reasons you may be getting different results is because some calculators just subtract their inflation assumption from the expected investment return.

For example:

Your calculation
return
FV(12%/12,16*12,-500,-80000,0)= $828,309
inflation
PV(3%/12,16*12,0,-828,309,0)= $512,851

Savings Calculators calculation?
return combined w/ inflation
FV((12%-3%)/12,16*12,-500,-80000,0)= $549,051

Is this the difference you are getting? I'm not sure why including inflation in the return calculation results in a less conservative result.

Puzzled,

Mitch
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