calculator for increasing regular savings

spurspants

Does anyone know of any online calculator that will show how much my savings will be if I increase the amount I save each year? There are loads based on monthly saving, number of years and interest rate but they all assume I will never up the amount I am putting away. For example, I want to see how much I would have if I put away £100 per month over 20 years but each anniversary I increase the amount going in by 5% and I got 5% per year growth on my savings. I don't care about adjusting the outcome for inflation. I can do that on another calculator. PLEASE HELP!

SnowMan

Easiest to create a spreadsheet of your own.

For example you can copy or export into excel (say) this google docs one that shows that doing it fairly precisely and allowing for 5% gross interest it would accumulate to £61,756 (which includes £22,077 interest - see cell L248).

Milarky

Geometric increasing saving formula: you get (x^t-y^t)/(x-y) where t is time in years and x and y are the growth rates due to investment and increased rate of saving respectively. Doesn't work in the one case you describe where x and y are equal. Really must get out more.

SnowMan

Milarky wrote: »

Geometric increasing saving formula: you get (x^t-y^t)/(x-y) where t is time in years and x and y are the growth rates due to investment and increased rate of saving respectively. Doesn't work in the one case you describe where x and y are equal. Really must get out more.

Curiosity forced me to check that and assuming the amount is paid uniformly over the period and the growth is gradual rather than once per year

I come up with (x^t - y^t)/(ln x - ln y)

So looks about right as ln (1+p) is approx p for small p

:o:o

spurspants

Wow! Thanks guys/girls. I didn't expect to find Will Hunting on here! I haven't dealt with formulae like this since A-Level maths 22 years ago.

The google spreadsheet is great. Is there an easy way to play with the figures (I've barely used spreadsheets before)? e.g. is there a way to change the savings increase rate from 5% to say 2.5% without changing the formula in every cell in column C? And any easy way to play with the number of years without entering each extra month?

Also does ^ to the power of? And what does ln mean?

Changing the increased rate of saving in my original example to 4% (as they cannot be the same 5%) would the formula thus be:

5^20-4^20/5-4?
This can't be right?!?!?!?!
Can you show me the formula with some numbers inserted please? You need to bear in mind that I'm an idiot.

This is such good stuff! Thanks again.

Milarky

spurspants wrote: »

Changing the increased rate of saving in my original example to 4% (as they cannot be the same 5%) would the formula thus be:

5^20-4^20/5-4?
This can't be right?!?!?!?!

That should be (1.05^20 -1.04^20)/(1.05-1.04) = 46.2 times first year...

Remember some of this isn't from 'growth': You save (1.04^20-1)/(1.04-1) = 29.77 times first year rather than '20' times.

SnowMan

spurspants wrote: »

Wow! Thanks guys/girls. I didn't expect to find Will Hunting on here! I haven't dealt with formulae like this since A-Level maths 22 years ago.

The google spreadsheet is great. Is there an easy way to play with the figures (I've barely used spreadsheets before)? e.g. is there a way to change the savings increase rate from 5% to say 2.5% without changing the formula in every cell in column C? And any easy way to play with the number of years without entering each extra month?

Also does ^ to the power of? And what does ln mean?

Changing the increased rate of saving in my original example to 4% (as they cannot be the same 5%) would the formula thus be:

5^20-4^20/5-4?
This can't be right?!?!?!?!
Can you show me the formula with some numbers inserted please? You need to bear in mind that I'm an idiot.

This is such good stuff! Thanks again.

Yes you can either copy the spreadsheet to another google spreadsheet and amend or else you can export it to say excel and then play with it from there.

The shaded items are intended as the inputs so effectively columns A,B,C,D and F can be changed.

So if you just want to change the interest rate to 2.5% you just change the input in cell F8 and the formula then all work automatically on the new interest rate.

To incorporate the growth rate in savings I just entered a formula in cell C20 then copied it down. The spreadsheet wasn't really intended to model annual increases in savings amounts so yes that does require a bit of manual intervention along those lines I'm afraid. So to change the growth rate to 2.5% change the 1.05 in the formula in cell C20 to 1.025 and then copy that right down the column to your last payment. You will also need to change cell C248 to be the gross interest in cell L248. Of course this could be easily automated with formulae.

Similarly as you say, to add extra years you do have to enter extra payments in column C. A trick to shorten the number of years is to to capitalise the interest before the last payment (for example to shorten to 19 years change cell B236 to 'Interest' using the drop down menu and read off the gross interest from cell L236, don't forget to change it back.

If you hover the mouse on the red traingles in about row 5 there are some help comments re the inputs.

I actually use a very similar spreadsheet to check the interest I am being paid on my accounts which is the main use of the spreadsheet although it can be used for longer term projections.

Yes ^ does mean to the power of

An example of Milarky's formula with numbers is

(1.05^20-1.04^20)/(1.05-1.04)= 46.22

Or a regular payment of £1 per annum initially paid for 20 years and increasing at 5% and with an interest rate of 4%pa accumulates to roughly £46