The Joshua Kennon-Green Wealth Projection Calculator
This tool is designed for academic illustrations to model long-term wealth projections based on user-supplied assumptions about returns, savings, inflation, and calendar timing.
It ignores taxes, fees, behavioral factors, sequence-of-returns risk, and real-world market path dependency. Accuracy is not guaranteed and results should not be treated as investment advice.
The chart shows total portfolio value over time in nominal dollars. If a value has been entered for both
"Investment Portfolio ($) Value at Starting Date" and "Amount Added to Portfolio on a Per Annum Basis Equivalent ($)",
then the lower shaded area represents the component attributable to the former (initial portfolio value) and the upper shaded area
the latter (periodic additional contributions). The outline traces total value.
Calendar
Year |
Year-End
Date |
Age at
Year-End |
Net Contributions
(Nominal Dollars) |
Total Value of Existing Portfolio at Year-End
(Nominal Dollars) |
Total Value of Portfolio Resulting from Any Values Shown in
"Amount Added to Portfolio on a Per Annum Basis Equivalent ($)" (Nominal Dollars)
|
Total Portfolio Value at Year-End
(Nominal Dollars) |
Total Portfolio Value at Year-End
(Inflation-Adjusted Dollars) |
Nominal values are projected using a constant average annual return, applied over each calendar year (or fraction thereof for the first year
if the measurement period begins on any date other than January 1st) and approximated with intra-year compounding at the selected contribution
frequency. Inflation-adjusted values are computed by discounting nominal values using the specified annual inflation rate relative to the
purchasing power on the Starting Date, based on the cumulative number of years (including any partial first year) between the Starting Date
and each year-end.
The calculator uses the standard relationship between nominal, real, and inflation rates:
(1 + rreal) = (1 + rnominal)/(1 + π). This means real return is slightly different from simply
subtracting inflation from nominal return. For example, a 10.00% nominal return with 3.00% inflation implies a real return of approximately
6.80% because (1.10 / 1.03) − 1 ≈ 0.06796 (6.80%), which is slightly less than the 7.00% obtained by simple subtraction (10% − 3%).
If the Starting Date is not the first day of its calendar year, the first projection row represents a partial year from the Starting Date
to December 31 of that calendar year. The Year # column labels this as a partial year, and first-year contributions can be treated as
pro-rated, zero, or full, according to the selected option.
The projections assume a smooth, constant compounding rate and ignore sequence-of-returns risk. In real markets, the order in which
good and bad years occur can have a profound effect on actual outcomes, particularly when large contributions or withdrawals are occurring.
Two investors with the same average annual return over a given horizon can experience dramatically different wealth levels depending
on the timing of returns. This calculator does not attempt to model those path-dependent effects.
If the resulting calculation includes a year in which the age of 65 is attained, that row is highlighted in green to denote what remains
arguably the most appropriate age to model traditional retirement for most people under most circumstances.
This Wealth Projection Calculator is provided as-is with no guarantee, warranty, or assurance of any kind.
By using it or any output it has generated, it is your responsibility to independently verify any calculations and assumptions.