Monday, November 14, 2005


This is my current plan for reaching my goal:

I created an excel file to run these kinds of calculations. You can download this file here. Once you download the file you can enter Goal, Years to Goal (could also be months, up to 100), Starting Amount, and Starting Year. The file then calculates the amount needed each year to meet your goal, and the anualized rate of return needed to meet the goal without additional contributions.

For my goal of $1.43 Million in 7 years (plus the minimum and stretch goals), this is what I came up with:

Min Goal Stretch
1 $ 8,400 $ 9,300 $ 10,000
2 17,500 21,500 24,900
3 36,600 49,700 62,000
4 76,500 115,100 154,700
5 160,000 266,600 385,900
6 334,700 617,400 962,300
7 700,000 1,430,000 2,400,000

To meet my goal I need to increase net worth by 130% a year; to meet my minimum goal I need to increase my net worth by 110% a year; to meet my stretch goal I need a 150% increase in net worth each year.

The first year will not be difficult to meet. I already have a little over $4,000 in my IRA and other accounts and I can contribute an additional $4,000 next year. That puts me just at the goal for the year, minus any bonus or employee match for my 401k contributions. But after that, I don't know exactly how I'm going to meet the goal.

My first balance sheet update is comming on December 1.

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